Melanie Bien: Abbey shareholders sleep easy about the Spanish acquisition

As you browse lazily through the Sunday papers, you may be feeling just a little bit guilty - if you happen to be one of Abbey's 1.8 million shareholders. That's because a 399-page monster of a document is demanding your attention.

As you browse lazily through the Sunday papers, you may be feeling just a little bit guilty - if you happen to be one of Abbey's 1.8 million shareholders. That's because a 399-page monster of a document is demanding your attention.

This scheme document was sent out last Friday and sets out details of the proposed acquisition by Spanish bank Santander Central Hispano. Thankfully, a more manageable summary covers how the bid affects shareholders and how you can vote. So you may not have to write off your weekend after all.

HBOS's decision to pull out of the running for Abbey last Wednesday means it is almost certain that Banco Santander will be successful in its bid. The Abbey board is recommending that investors vote in favour of the proposal.

A takeover by a British bank would have had many practical advantages for Abbey shareholders because the new shares would have been listed on the London Stock Exchange and quoted in sterling rather than euros. But Santander has paid attention to investor concerns and, as well as a Spanish listing, is seeking a secondary placing on the London market in the first half of next year.

Under the terms of the deal, for every Abbey share you own, you will receive one in Santander plus a cash dividend of 31 pence per share. These dividends will be available in sterling.

Santander is also offering free share dealing, available to UK-resident Abbey investors who own fewer than 2,000 shares on the day the acquisition is completed. There is an option for those people to sell their holding without charge and receive the proceeds in sterling. You have to offload all your shares to qualify for this - no part sales are allowed - and you have six months to do so. If you are interested, ask for a dealing-facility information pack when you return your proxy cards for the extraordinary general meeting (EGM) on 14 October at the Wembley Conference Centre.

If Abbey investors approve the acquisition, it should be completed by 12 November. Share dealing will start on the Bolsas de Valores, the Spanish exchange, on 16 November.

However, problems remain. While share dividends will be paid in sterling with no foreign exchange commission, they will be subject to Spanish withholding tax at a rate of 15 per cent on the gross amount. Santander and Abbey are looking at ways of mitigating this but so far no solution has been found.

You won't get a certificate for your Santander shares, either, as Spanish firms don't issue these to individuals. Instead, you'll receive the shares in the form of Crest depository interests (CDIs), which will be held by a corporate nominee on your behalf.

And if you sell your new Santander shares, you will have to file a Spanish tax return. For those who already have to struggle with the self-assessment system in the UK, this will be an extra hassle.

But the main question Abbey shareholders need to consider is, will Santander bring in the lower charges and better service that it promises? Questions have been raised over whether the bank is more efficient than British rivals and whether customers will get a cheaper deal.

In terms of corporate efficiency and profitability, Santander holds up fairly well compared with UK banks. But banking in Spain is rather different. For example, overdraft charges are much lower, with the Spanish horrified at the rates imposed by British high-street banks on customers.

But Santander, in line with many other Spanish banks, charges customers a nominal monthly fee for having an account and for transactions - anathema to UK current account holders.

In any case, there's no need to panic about what might happen. It looks as though Santander will be successful in its bid for Abbey, and if this doesn't turn out to be as advantageous as the Spaniards are promising, shareholders can simply sell up, take their money and run.

Abbey customers should continue to shop around for the best-value financial product: if it happens to be on offer elsewhere, I suggest you vote with your feet.

Abbey shareholders can call the helpline if they have any questions on 0870 532 9430 (Monday to Friday 8.30am to 8pm and Saturday 9am to 1pm).

m.bien@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

Sport
premier leagueLive: All the latest news and scores from today's matches
News
newsMcKamey Manor says 'there is no escape until the tour is completed'
News
Queen Elizabeth II sends the first royal tweet under her own name to declare the opening of the new Information Age Galleries at the Science Museum, South Kensington, London
media... and the BBC was there to document one of the worst reactions
News
politics
PROMOTED VIDEO
Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Compensation and Benefits Manager - Brentwood - Circa £60,000

    £60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

    Data Analyst/Planning and Performance – Surrey – Up to £35k

    £30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

    IT Systems Business Analyst - Watford - £28k + bonus + benefits

    £24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

    Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

    Wilko Johnson, now the bad news

    Former Dr Feelgood splits with manager after police investigate assault claims
    Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

    Mark Udall: The Democrat Senator with a fight on his hands

    The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
    New discoveries show more contact between far-flung prehistoric humans than had been thought

    New discoveries show more contact between far-flung prehistoric humans than had been thought

    Evidence found of contact between Easter Islanders and South America
    Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

    Cerys Matthews on Dylan Thomas

    The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
    DIY is not fun and we've finally realised this as a nation

    Homebase closures: 'DIY is not fun'

    Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
    The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

    Air New Zealand's wizard in-flight video

    The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
    Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

    Pumpkin spice is the flavour of the month

    The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
    11 best sonic skincare brushes

    11 best sonic skincare brushes

    Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
    Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

    Paul Scholes column

    I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

    While other sports are stalked by corruption, we are an easy target for the critics
    Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

    Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

    Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

    A crime that reveals London's dark heart

    How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
    Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

    Lost in translation: Western monikers

    Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
    Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

    Handy hacks that make life easier

    New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
    KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

    KidZania: It's a small world

    The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker