Alliance & Leicester is set to merge with rival Abbey after the latter’s owner Santander agreed to a £1.26bn deal to buy the UK lender. The take-over of A&L by Santander will be seen as the biggest shake-up of the UK high street banks to date.
A&L confirmed this morning (July 14) that it has received an approach and later revealed that it was from Santander, which is Europe’s second largest bank after HSBC. The merging of the two banks will give Santander about 14% of the UK mortgage market.
The move is expected to lead to huge cuts in A&L’s workforce. Since taking over Abbey four years ago, Santander has cut staff numbers by almost a third.
It also comes shortly after the high street lender got into difficulties when it started investing in assets seen as “risky”.
Like Northern Rock and Bradford & Bingley, A&L is a former building society that pursued expansion after demutualisation in 1999.