Banco Santander and Royal Bank of Scotland have had a strategic alliance and cross-shareholding since 1988. Today the Royal Bank has a 3.3% stake in Santander, while Santander has a 9.89% stake in RBS. Meanwhile Santander has a 50% stake in the Royal Bank of Scotland (Gibraltar), which serves the “offshore” market of wealthy tax exiles, offshore businesses and financial intermediaries.
They have established joint banking operations in Germany, Belgium and Portugal, and a secondment programme has seen the son of Sir George Mathewson working for BSCH.
Despite cultural differences, the strategic alliance has spawned a number of ideas and strategies that have boosted the operations of both banks. The first fruit of the cross-shareholding was Interbank On-line Systems (IBOS). Launched in 1991, the system permits member banks in both Europe and America to offer instantaneous money transfers. Although IBOS now embraces over 5000 bank branches in Europe and 6000 in North America, only a minority of banks have signed up to the system.
In 1998, RBS disposed of part of its holding in Santander, realising a profit of £57m. But soon after Banco Santander’s merger with Banco Credit Hispano, RBS quietly upped its stake again. “That was fairly innocent stuff and doesn’t hint at anything larger,” commented corporate affairs director Howard Moody.”The move raised our stake in BSCH to roughly the same level as it was before the Santander merger with BCH, which diluted our holdings from 3.4% to 2.3%.”
The two banks have worked in tandem, for example by setting up the joint venture capital house Vista Capital de Expansion. In 1996 this forged an alliance between three regional supermarket groups in the south of Spain, an operation to which it introduced new management. Last year the business, which has been renamed Superdiplo, was floated on the Madrid stock exchange, and RBS made £96 million on its investment. Recent changes at Royal Bank Development Capital suggests Royal Bank is eager to step up its development capital business in continental Europe.
This article was published in the Sunday Herald on 14 November 1999