Santander U.K. Writes Off $83.5 Million on Scrapped RBS Deal

Banco Santander SA’s (SAN) U.K. division said it made a provision of 52 million pounds ($83.5 million) to write off costs related to the Spanish lender’s abandoned deal to acquire branches from Royal Bank of Scotland Plc.

The decision “was due to the ongoing delays and our concern that the continued uncertainty regarding timing was not in the best interests of customers and staff,” Ana Botin, chief executive officer of the U.K. unit, said in an e-mailed statement of the division’s results today.

Santander, which pulled out of the agreement to buy 316 branches from RBS this month, is among Spanish banks facing pressure to increase capital amid mounting real estate losses at home and pain from the three-year-old euro-area sovereign debt crisis. Santander had agreed in 2010 to pay 350 million pounds more than the branches’ net asset value when the transaction was scheduled to be completed, Edinburgh-based RBS (RBS) said at the time. That valued the business at about 1.7 billion pounds.

Since then, Santander, Spain’s biggest bank, has sought ways to increase capital. It carried out an offering of as much as $4.09 billion in shares of its Mexican unit Grupo Financiero (BSMX) Santander Mexico SAB last month.

The Spanish bank earlier today said third-quarter profit dipped a greater-than-estimated 94 percent as it purged more soured real estate.

Santander’s acquisitions in the U.K. include Abbey National, Alliance & Leicester and parts of Bradford & Bingley Plc. It now has about 1,200 branches and is the second-largest mortgage lender behind Lloyds Banking Group Plc. (LLOY)

To prepare for the now-scrapped RBS deal, “a considerable investment was made in building the infrastructure and product range required to become a full-scale retail and commercial bank,” Santander said today. “This work will continue to support our longer-term strategic goals.”

To contact the reporter on this story: Ambereen Choudhury in London at achoudhury@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

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