BANCO Santander was under attack from an influential shareholders group last night after it denied 1.8 million UK private investors the right to take part in its 7 billion (£5.9bn) rights issue.
The United Kingdom Shareholders' Association (UKSA) said it was "concerned" at the decision by the Spanish bank to exclude its army of UK shareholders – which it inherited after the acquisitions of Abbey and Alliance & Leicester – from the cash c
all.
Criticism of Santander's move comes amid controversy about existing shareholders in Barclays losing their pre-emption rights as part of the bank's £5.8bn capital injection from Middle East investors.
Barclays's decision was earlier this week branded a cause of "grave concern" by the Association of British Insurers.
Commenting on Santander's stance, Roger Lawson, director of UKSA, said: "Yes, we are concerned about this. Particularly on the back of Barclays. It is unfortunate. We are preaching the principle that all shareholders should be treated equally. Private shareholders should be able to subscribe for their rights like institutional shareholders."
Lawson said he understood the practical difficulty of Santander writing to its 1.3 million Abbey small shareholders and 500,000 A&L private investors.
He maintained that it was also debatable how many UK small shareholders would take up the rights in the current climate and following Bradford & Bingley's disastrous rights issue. B&B's deposit business is currently being taken over by Santander.
Lawson added that the principle of all existing shareholders being able to exercise their pre-emption rights on new shares was "still being overriden".
Both Abbey and A&L had large numbers of small shareholders after floating on the UK stock market because of their previous status as building societies. The average UK shareholder in Santander holds about 100 shares.
Santander has said it has written to its UK shareholders to tell them they will not have the opportunity to take up their rights because there was not enough time to send the rights issue document to them.
The bank plans to complete its market capital-raising to help bolster its balance sheet within 15 days. Instead, the bank plans to sell the UK shareholders' entitlements in the market and distribute the proceeds. An Abbey spokesman said: "UK shareholders will receive cash for their rights, which they can keep or invest in Santander shares without paying a broker fee."
It is understood the proceeds should be available to UK shareholders in mid-December.
If any UK shareholder wishes to add to their investment, Santander said the free purchase facility to buy additional shares without paying brokers' fees will be available on 11 December and 17 December Santander has also set up a UK shareholder helpline – 0871 384 2000 _ open 8.30 am to 5.30pm Monday to Friday.
