Santander could attempt cash refuelling as it races on in UK

According to reports yesterday, the group – currently rebranding its Bradford & Bingley and Alliance & Leicester branches – has sounded out institutional investors about a cash call, one of a several options being considered.

It is claimed the Spanish group would retain a majority stake in the business but promise to return half of the profits generated at the UK business in dividends.

The bank's British business generated a profit of around 1.5 billion last year, a 50 per cent increase over the previous year. Profits are expected to rise to around 2bn in the near future. Britain now accounts for about 16 per cent of group profits.

If the group proceeded with the plan, it is thought the new bank would immediately enter the FTSE 100 with a market capitalisation of around 15bn.

Santander made a similar move with its Brazilian business last year, raising about 5bn for the group. The largest ever IPO in Brazil, the New York part of the listing was also the largest on a US stock exchange in 18 months.

Santander is thought to be considering the move to raise cash in part to buy a network of 300 branches being sold by Royal Bank of Scotland. A number of banking groups are lining up to acquire the RBS branches, including National Australia Bank, which wants a private equity firm to help bankroll its bid, and Virgin Money, the financial arm of Sir Richard Branson's empire.

Analysts say Spain's largest bank could also use the funds from a possible float to cover losses incurred in its home market, which has been hit by a sharp downturn in the property sector.

Santander entered the British market in 2004 when it paid 9bn for Abbey National.

It has since more than doubled its UK branch network after buying Alliance & Leicester and part of Bradford & Bingley.

Santander's three UK brands are all being rebranded under the single Spanish banner in a comprehensive advertising campaign which is fronted by Formula 1 driver Lewis Hamilton.