Santander says bought 2.3 pct of RBS in 2007

MADRID (Reuters) - Spanish bank Santander (SAN.MC: Quote, Profile, Research) bought 2.3 percent of Royal Bank of Scotland (RBS.L: Quote, Profile, Research) last year, according to its annual report published on Friday -- days before the British bank is expected to announce a rights issue.

The report listed 1.4 billion euros ($2.2 billion) of RBS shares as assets that were available for sale, suggesting that the stake was financial and not strategic.

Santander, Europe's second-largest bank, has a long history with RBS. The two had a 16-year partnership, holding stakes in each others' capital, until 2005, when they both sold out.

Santander sold some of its stake to get regulatory approval for its 2004 purchase of British lender Abbey while RBS used the proceeds of its sale to buy into Bank of China (3988.HK: Quote, Profile, Research).

The two remained on good terms and last year Santander and RBS teamed up again, this time with Belgian-Dutch bank Fortis (FOR.BR: Quote, Profile, Research), to buy ABN AMRO and break it up between them.

The Santander annual report also showed it had a 2.1 percent financial stake in Fortis at the end of last year, while Chairman Emilio Botin personally owned 8.2 million RBS shares.

Earlier on Friday, sources close to the matter said RBS would launch a rights issue next week, the first major fundraising for a British lender, as it shores up its balance sheet after the ABN takeover and a $3.2 billion writedown.

Analysts said the rights issue could raise more than $20 billion for Britain's second-largest bank.

At the end of 2007, Santander owned 4.23 percent of Japan's Shinsei Bank (8303.T: Quote, Profile, Research), 1.2 percent of Portugal's Banco BPI (BBPI.LS: Quote, Profile, Research) and 3.3 percent of Spain's Iberdrola (IBE.MC: Quote, Profile, Research).

(Reporting by Jane Barrett; Editing by David Hulmes)