Santander 'restarts M&T merger talks'

17 August 2010

Santander has restarted talks with M&T Bank over the possibility of merging their US operations.

Insider sources told the Financial Times that question marks remain over who would control the combined businesses of Sovereign - the name of Santander's American unit - and M&T.

Talks originally ground to a halt in May over the issue but a potential deal is now back on the table, with regulators such as the Federal Reserve being sounded out about their views on the matter.

Under the proposed terms of this year's earlier agreement, M&T was to take over Sovereign in a stock-based transaction, with Santander then taking the 22.5 per cent stake in M&T currently owned by Allied Irish.

Earlier this month, Santander agreed a deal to purchase 318 bank branches from Royal Bank of Scotland (RBS) in the UK.

The handover is expected to be fully completed by December 2011 as RBS continues to make divestments following its bailout from the British government.

By Tony Aynsley

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