Santander to court bank's army of small investors

Abbey National's 1.7 million private investors who do not want to own shares in Spain's biggest bank will be given the chance to swap their paper for cash, under plans being drawn up by Santander Central Hispano.

Abbey National's 1.7 million private investors who do not want to own shares in Spain's biggest bank will be given the chance to swap their paper for cash, under plans being drawn up by Santander Central Hispano.

There will be a share dealing service that Abbey's small shareholders - who control 32 per cent of the bank's shares - will be able to use either through its network or via a specially set up telephone service, for which there may be a small charge.

Just as going on a charm offensive with the City institutional investors is central to Santander's attempt to win support for its bid, it is also keen to get the individuals who own Abbey shares on side because they account for such a large number of the bank's share register.

While Santander is not planning to list its shares in the UK as well as Spain, investors will have the option of receiving their dividend in sterling if they do decide to hang on to their investments. The payout will also be distributed four times a year, compared with the twice-yearly dividend paid by Abbey and other UK banks.

Foreign shares, however, tend not to be favoured by private investors, because of the high cost of trading them. Companies are also not very keen on retaining large shareholder bases outside the country in which their shares are listed, because of the administrative cost of all the letters and other information which must be sent to shareholders.