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THE planned flotation of Santander's UK arm is set to be put back to 2013 at the earliest because of uncertainty caused by bank ring-fencing, it was reported.

The Spanish-owned bank's initial hopes of raising pounds 3bn through the sale of a 20% stake later this year have already been frustrated by market turbulence.

Now newspaper reports suggest that the float is unlikely to happen until 2013 at the earliest after this week's Vickers Report proposed that banks must ring-fence their retail arms from investment banking.

Even though Santander UK is predominately a retail bank, between 5% and 10% of its assets would fall outside the definition of what can be included within a retail ring-fence, analysts have said.

Santander, which is the owner of the former Abbey, Alliance & Leicester and Bradford & Bingley building societies, is lobbying for these activities to be included within its retail businesses.

If it fails, a listing could be more difficult and the bank might need to set up a separate holding company that would own the different parts of the business.

The Vickers report gave banks until 2019 to establish ring-fences between their retail and investment arms.

Santander UK, which has more than 1,400 branches and employs more than 25,000 staff, was formed through the 2004 acquisition of Abbey National.

In 2008, it acquired Alliance & Leicester and the retail and savings arms of Bradford & Bingley.

Last year, it also agreed to buy over 300 branches from Royal Bank of Scotland, though completion of this has also been delayed and is not expected until November next year.

Analysts said investors may also prefer to wait and see if the RBS branches have bedded in before Santander UK floats.


* WAITING GAME: Spanish banking giant Santander may have to delay a planned flotation of its UK operations following proposals to ring-fence retail banking
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Title Annotation:Business
Publication:Huddersfield Daily Examiner (Huddersfield, England)
Date:Sep 17, 2011
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