The European Commission has cleared under the EU Merger Regulation the acquisition of certain assets of UK mortgage bank Bradford & Bingley plc by Abbey National plc, the UK arm of Banco Santander. After examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.

As a result of the transaction, Abbey acquired all retail savings account deposits held by Bradford & Bingley together with the agencies and other essential assets for the operation of the business. Some remaining assets of Bradford & Bingley, in particular the past mortgage lending activities, have been transferred to the State.

Since Bradford and Bingley did not provide a full range of retail banking services prior to the merger, the acquisition is unlikely to have a significant impact on the overall position of Abbey in retail banking.

However, since Bradford and Bingley was active in mortgage lending, the Commission considered in particular the mortgage market more specifically. The Commission based its analysis on the assumption that the transferred assets would be sufficient to recreate the pre-merger business of Bradford and Bingley if Abbey so wished.

The savings accounts are directly transferred, whereas the customer relations and deposit base might allow Abbey to further build its book of mortgage business at a similar rate to that of Bradford and Bingley in the past. However, even on this assumption, the market shares of the merged entity on the UK mortgage market would remain below 20%, with a relatively small increment resulting from the merger. Moreover, Abbey will continue to face a number of competitors on this market. Therefore, the Commission concluded that the transaction would not raise competition concerns.

Companies involved in the transaction

• Banco Santander S.A. (Public, MCE:SAN) is an international group of banking and financial companies operating in Europe and in Latin America. Its subsidiary Abbey National plc is active in retail banking and personal financial services in the UK. Prior to the transaction, Bradford & Bingley offered personal financial services in the UK, in particular savings accounts and mortgage lending.
• Bradford & Bingley (Public, LON:BB) is a UK-based financial institution, which provides specialist mortgages and savings products. As of December 31st, 2007, it had a balance-sheet total of £52 billion (approximately €65.7 billion). It operated 197 branches and 141 agencies spread across the UK and organised in four operational regions. Its market share of net new mortgage lending at the end of the 2007 was 7.7%.

The European Commission authorised on October, 1st, under EC Treaty state aid rules, the UK authorities' package of measures designed to protect retail depositors and support the orderly winding down of those parts of Bradford & Bingley's activities not being acquired by Banco Santander. The Commission decided at the time that Banco Santander received no aid when it bought Bradford & Bingley's retail deposit business, as it paid the market price.