Banco Santander's (BS) bid for Abbey has received a decidedly lukewarm reception report most papers today after the two companies yesterday revealed details of the payment existing Abbey shareholders will receive.
The Times is just one of many to note the value of the bid at 548p per share falls well below City expectations of between 560p to 580p.
What may be a bigger issue for shareholders, however, is whether BS’ plans for driving costs out of Abbey and putting the firm on the road to a firmer recovery are sustainable or not.
The Daily Telegraph says acceptance of BS’ bid underlined “Abbey’s failure to grow its business and compete with rivals.”
This point was highlighted by comments from BS chief executive Alfredo Saenz, who yesterday noted: “It has failed to develop its business because of the need to clean up its balance sheet. The retail banking operations have been lacking attention over the last few years."
Further questions arise from additional comments concerning cost-cutting, particularly in Abbey’s IT. BS says it will cut costs by combining the two companies’ systems, but at the same time admits that UK banks generally are already far more profitable than Continental counterparts.
BUSINESS INSURANCE COSTS may be on the way down reports the FT after broker Aon said some it its clients have been able to gain lower premiums.
However, calling a full turnaround in the market after the steep rises in insurance costs of 2002 and 2003 will require further evidence of falling premiums for all types of businesses, the FT adds.
Insurers say reinsurance costs are only stabilising rather than falling, while even Aon admits employer’s liability insurance premiums are still rising because of rising numbers of claims.IFAonline
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