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Santander added to the gloom in the finance industry yesterday when it announced a cull of 1,900 jobs in its three British businesses - Abbey, Alliance & Leicester and Bradford & Bingley.
The Spanish bank said the axe would fall on staff based at offices in London, Leicester and Bradford. Unions said the job cuts, which are equivalent to 8% of Santander's 23,000 UK workforce, were "a bitter blow" before Christmas. Officials were particularly dismayed that the bank refused to rule out compulsory redundancies.
Santander also felt a chill wind from investors who signalled their disappointment with the bank's performance by sending its shares down 6% to 579p at the close of trading. Shares in the bank have halved since June, when they were trading above £11.
In the summer, the bank was riding high on reports that it would emerge from the credit storm better placed than rivals, despite strong signals that the British and Spanish economies were heading for recession.
The purchases of Alliance & Leicester and Bradford & Bingley's savings business were initially viewed positively, but investors began to sell when it became clear Santander was reliant for much of its profits on two of Europe's economies worst hit by the credit crunch.
A strong presence in Latin America has also become problematic for Santander after a severe slowdown in most emerging economies.
Santander said the cuts were part of plans to save £180m by the end of 2011. They are expected to fall particularly heavily on Alliance & Leicester.
The firm said there would be minimal impact on roles dealing with customers in branches, with the focus of the reductions on back-office jobs and across operational and head office sites. It said it had no plans to close major sites, although it may consolidate some smaller offices into larger sites.
António Horta Osório, chief executive of the combined UK business, said: "Santander is committed to continuing the growth of its UK businesses profitably and has already shown through Abbey that it can drive efficiencies in operational areas in order to grow its retail business and provide customers with greater value-for-money products.
"At our third-quarter trading update, Abbey increased profits and grew market share in mortgages, savings, current accounts and investments, demonstrating that we are continuing to lend whilst being seen as a safe haven for customers' deposits.
"Today's announcement shows we are on track to fulfil the commitment we made at the time of the Alliance & Leicester acquisition to grow our UK business whilst ensuring we meet our cost-saving targets.
"Santander is committed to its branch network in the UK, reflecting its status as one of the world's leading retail banks, with the largest international retail branch network in the world. The combined UK business now has nearly 1,300 branches, which we expect to maintain or slightly increase in the near term."
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