Santander UK’s float remains ‘on hold’

SANTANDER, the eurozone’s biggest lender, has vowed to press ahead with plans to list its Mexican unit – but warned that the listing of its UK business would remain “on hold” for the time being.

But Stephen Jones, Santander UK finance director, said he still expects the UK arm to spin-off from its parent and float in London next year or in 2014.

Jones said: “We’ve indicated 2013 and possibly 2014 and we want to make sure we’re floating against an economic backdrop that’s more positive than today.”

His comments came as Spanish parent group Banco Santander suffered a 51 per cent plunge in first-half profits as it set aside €1.3 billion (£1bn) to protect itself against toxic property loans.

Chairman Emilio Botin said the provisions will allow Santander to put property write-offs in Spain “behind us by the end of this year”.

In the UK, Santander’s British subsidiary reported that underlying profits had slumped by 43 per cent to £725 million, after stripping out the effect of last year’s £731m provision for mis-selling of payment protection insurance.

Santander UK has been squeezed by higher funding costs and low interest rates, with the amount being repaid by borrowers out-weighed by the total being taken out in mortgages.

Ana Botin, chief executive of Santander UK, applauded steps being taken to help banks and their customers, such as the “funding for lending” scheme.

She said: “We welcome and support recent UK government and Bank of England initiatives to improve the flow of liquidity to banks and support lending to UK consumers and businesses.”