Santander UK float ‘off the table’

Santander has ruled out an imminent flotation of its UK arm, which saw its profits tumble 20 per cent after being hit by a drop in interest income during the first half of the year.

The Spanish bank was forced to shelve plans to float the business in 2011 amid market volatility and group chief executive Javier Marin said yesterday that an initial public offering (IPO) was currently “off the table”. He added: “We don’t have plans to have an IPO in the UK in the short or medium term.”

Marin was speaking after Santander UK reported a pre-tax profit of £549 million for the six months to 30 June, down from £690m a year earlier.

Net interest income – the difference between earnings from mortgages and loans and the amount it pays out to savers – fell 5 per cent to £1.4 billion as the bank was hurt by the cost of luring deposits with high savings rates, while it also saw wholesale funding costs rise due to Europe’s sovereign debt woes.

The bank also announced plans to buy back up to £800m of US and UK bonds to boost its capital strength.

Operating provisions fell sharply to £299m, from more than £1bn in the second half of 2012, when the group took a £55m hit from the collapse of talks to buy 316 branches from Royal Bank of Scotland.

UK chief executive Ana Botin, who has run the bank since 2010 when previous boss Antonio Horta-Osorio left for Lloyds Banking Group, said lending to small and medium-sized firm has risen 12 per cent in the past year and she is targeting an 8 per cent share of the market by 2015.

Botin, who recently joined US giant Coca-Cola as a director, said: “Helping communities prosper through providing simple, personal and fair banking for UK households and businesses is at the heart of our strategy.”