Outcome of EGM

Banco Santander Central Hispano SA 21 October 2004 NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR FROM THE UNITED STATES OF AMERICA, CANADA, AUSTRALIA OR JAPAN Recommended Acquisition of Abbey National plc ('Abbey') by Banco Santander Central Hispano, S.A. ('Banco Santander') Outcome of General Shareholders' Meeting Banco Santander is pleased to announce that, at a General Shareholders' Meeting of Banco Santander held today, the resolutions necessary to implement the proposed acquisition of Abbey (the 'Acquisition'), including the increase in share capital of Banco Santander, were duly passed. The Acquisition remains conditional on certain regulatory and other approvals including the sanction of the High Court of England and Wales. Subject to the satisfaction or waiver of the remaining conditions, the Acquisition is expected to become effective on 12 November 2004. The following is a translation of the announcement released in Spain today by Banco Santander relating to the statements made at the meeting: 'THE SHAREHOLDERS' MEETING OF GRUPO SANTANDER APPROVES CAPITAL INCREASE FOR THE ACQUISITION OF ABBEY NATIONAL Lord Burns will remain as Chairman of Abbey and Francisco Gomez Roldan will be its new Chief Executive. Santander, 21st October 2004. The Extraordinary General Shareholders' Meeting of Grupo Santander today approved the capital increase for the acquisition of the U.K. bank Abbey National. The transaction will involve an issue of up to 1.511 billion new Santander shares, representing approximately 24% of the share capital. The takeover of Abbey by Santander - the largest cross-border acquisition in European retail banking history and the biggest investment ever made by a Spanish company in Europe - will place the Group among the ten leading banks in the world by stock market value. Emilio Botin, Chairman of the Group, said: 'This operation will create value for our shareholders and open up new avenues for continued growth.' The Chairman reaffirmed the Group's stance on cross-border mergers. 'We do not believe in cross-border mergers of equals, because they do not create value. Without a single, effective management, they make it difficult to integrate different management cultures and determine clear business lines.' And he stressed: 'However, we do believe in, and have successfully undertaken, many cross-border acquisitions in the Americas and in Europe. And we have proved that they create value. The Abbey operation is an acquisition, not a merger. And it is an acquisition that fits perfectly well into our strategy.' He pointed out that 'the Abbey transaction is a great opportunity for Grupo Santander. He recalled that Abbey was the sixth largest bank in the United Kingdom and number two in mortgage business, with 740 branches and 18 million customers. 'It has an important retail franchise of great potential. We are convinced that we can improve its management and its earnings'. 'It is an activity we know well, one that fits in perfectly with our multi-local banking strategy focused on retail banking.' 'We have approached this transaction with very clear ideas: we are going to do what we do best - customer banking', he said. 'We are going to strengthen Abbey's business capabilities and enhance the quality and efficiency of its products and services. We will do all this without closing branches. We will take advantage of the competitive advantages afforded by our technology platform, Parthenon, and our cost control'. Regarding the impact of the acquisition on shareholders, Botin said that 'In this transaction, as in all those we have undertaken in the Bank's history, our objective is to create value.' 'We are convinced that the purchase of Abbey is a good operation for our shareholders'. 'After the purchase of Abbey, there will be new investors throughout the world interested in our shares'. Botin reviewed some of the measures to be set in motion immediately after the approval of the transaction, which would benefit U.K. shareholders, such as the planned listing of Santander shares on the London Stock Exchange, the payment of Santander's quarterly dividends in sterling, the Santander share trading mechanism for small shareholders until listing on the London Stock Exchange and the setting up of a shareholder relations office in the U.K. He also confirmed that U.K. shareholders would enjoy the same advantages as those presently available to all other Santander shareholders. Botin announced that the Bank's Board had decided, subject to the successful conclusion of the transaction, that Lord Burns would remain as the Chairman of the Board of Directors of Abbey National and that its new Chief Executive would be Francisco Gomez Roldan, until now the Group's Chief Financial Officer. Alfredo Saenz: 'All energy can now be focused on retail banking, Abbey's core business, and developing the franchise's capacity for growth.' The 2nd Vice Chairman and CEO, Alfredo Saenz, began his address by explaining Grupo Santander's business model, a retail banking business model that is adapted to each market, built on three basic pillars: obtaining critical mass in relevant markets; a strong sales and customer service culture and strict cost control. The CEO listed the initial priorities for Abbey: reinvigorating its sales capabilities, strengthening distribution through its branches, reducing operational costs (especially in technology and the rationalisation of back-office operations) and finally, the sale of non-strategic assets. 'We believe there is a wide margin for improvement, both in costs and revenues', he stressed. He recalled that cost savings were estimated to reach 450 million euros over three years, whilst revenue synergies were estimated to reach 220 million euros in 2007. Saenz summed up in numbers the size of the enlarged Grupo Santander: among the top ten banks in the world by stock market capitalisation, based on yesterday's Grupo Santander share price, of more than 50 billion euros; more than 600 billion euros in assets, with a customer loan portfolio of 335 billion euros and deposits of 245 billion euros, based on end 2003 figures. The enlarged Group would have 59 million customers, 9,940 branches and 131,000 employees.' Enquiries: Banco Santander Keith Grant (Head of International Media) + 34 91 289 5206 Peter Greiff + 34 91 289 5207 Maitland Angus Maitland + 44 20 7379 5151 Philip Gawith Martin Leeburn Brunswick Rurik Ingram + 44 20 7404 5959 The availability of the Acquisition to persons who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements. This announcement contains forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. Forward looking statements may be identified by words such as 'expects', 'anticipates', 'intends', 'plans', 'believes', 'seeks', 'estimates', 'will' or words of similar meaning and include, but are not limited to, statements about the expected future business and financial performance of Banco Santander resulting from and following the implementation of the Scheme. These statements are based on management's current expectations and are inherently subject to uncertainties and changes in circumstance. Among the factors that could cause actual results to differ materially from those described in the forward looking statements are factors relating to satisfaction of the Conditions, Banco Santander's ability to successfully combine the businesses of Banco Santander and Abbey and to realise expected synergies from the Acquisition, and changes in global, political, economic, business, competitive, market and regulatory forces. Neither Banco Santander nor Abbey undertakes any obligations to update the forward-looking statements to reflect actual results, or any change in events, conditions, assumptions or other factors. This announcement does not constitute an offer for sale of any securities or an offer or an invitation to purchase any securities in any jurisdiction. The New Banco Santander Shares will only be distributed to existing Abbey Shareholders. The New Banco Santander Shares to be issued to Abbey Shareholders under the Scheme have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended, or under the securities laws of any state, district or other jurisdiction of the United States, Australia, Japan, Malaysia or Italy and no regulatory clearances in respect of the registration of New Banco Santander Shares have been, or will be, applied for in any jurisdiction (other than as set out in the following paragraph). In the United States, the New Banco Santander Shares will be issued in reliance upon the exemption from the registration requirements of the U.S. Securities Act of 1933, as amended, provided by Section 3(a)(10) thereof. Under applicable US securities laws, Abbey Shareholders and holders of Abbey ADSs who are affiliates of Abbey prior to, or will be affiliates of Banco Santander after, the Effective Date will be subject to certain U.S. transfer restrictions relating to the New Banco Santander Shares and the New Banco Santander ADSs received in connection with the Scheme. The provincial securities laws in all provinces of Canada, other than Quebec, require the first trade in the New Banco Santander Shares to be made through an exchange or a market outside of Canada or to a person or company outside of Canada or otherwise on a prospectus exempt basis under such laws. In addition, when selling the shares, holders resident in a province of Canada other than Quebec must use a dealer appropriately registered in such province or rely on an exemption from the registration requirements of such province. Banco Santander will apply for a ruling or order of the Financial Markets Authority in the Province of Quebec to exempt the first trade or resale of New Banco Santander Shares issued to Abbey Shareholders resident in the Province of Quebec from the prospectus and registration requirements of Quebec securities legislation. Capitalised terms used but not defined in this announcement have the meaning given in the scheme document dated 17 September 2004 relating to the Acquisition. This information is provided by RNS The company news service from the London Stock Exchange
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