1.4m British savers to pay for Spanish bank bailout

MORE than a million British shareholders in Santander are being asked to hand the bank extra cash after it bailed out a rival in Spain.

Santander has around 1.4m UK investors who were given stock to replace their shares in Abbey National when it was taken over 12 years ago.

Earlier this week, Santander agreed to buy struggling competitor Banco Popular for €1 as it teetered on the edge of collapse over £32.2bn of toxic property loans. It is now raising £6.1bn to shore up the stricken firm – and UK investors will be asked to contribute.

The Mail understands that British shareholders will be asked to contribute around £173m in total – roughly £124 each, based on an average shareholding. Those who choose not to take part in the fundraising will then see their stake watered down.

There are growing concerns in the City about the takeover, which has uncomfortable parallels from the days of the financial crisis. In 2008, Lloyds stepped in to rescue failing HBOS in a £12.2bn tie-up – and both had to be bailed out weeks later with £20.3bn because the deal was so toxic.

Last night, veteran commentator David Buik of stockbroker Panmure Gordon warned that the deal was likely to have been agreed only after heavy pressure from the European Central Bank (ECB) and the authorities in Spain, and that shareholders might end up suffering.

It also emerged last night that the Banco Popular rescue was rushed through because of a run on the bank – meaning massed ranks of savers started to pull their money out, severely threatening its ability to survive. The last time this happened in the UK was during the 2007 collapse of Northern Rock, forcing the Government to nationalise it.

A Santander spokesman said: ‘ The acquisition represents excellent value for Santander shareholders, with an expected return on investment of 13pc to 14pc in three years.’