Crosby hints HBOS is unlikely to mount rival bid for Abbey

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The Independent Online

James Crosby, the chief executive of the high street bank HBOS, yesterday said Britain's biggest banks would have "real difficulties" persuading the competition authorities to accept a domestic bid for Abbey National, which is currently recommending an offer from Spain's Santander Central Hispano.

James Crosby, the chief executive of the high street bank HBOS, yesterday said Britain's biggest banks would have "real difficulties" persuading the competition authorities to accept a domestic bid for Abbey National, which is currently recommending an offer from Spain's Santander Central Hispano.

Mr Crosby, whose bank is among those that could make a rival offer for Abbey, said: "The Competition Commission analysis is pretty copious and highlights there are real difficulties for anybody in that area."

Britain's major banks would like to snap up Abbey, Britain's second-biggest mortgage lender, because it would give them a boost on the high street, while providing large swathes of cost savings.

But they have held off from making a move after Lloyds TSB was blocked by the commission when it attempted to take over its smaller rival for £18bn in 2001 on the grounds that the deal would have given Lloyds too large a share of the current account market for personal customers and small businesses.

However, Santander's offer, which emerged last Friday, has caused the UK banks to think again about whether they could persuade the commission that the competitive environment has changed dramatically in the past three years.

City investors appear to think one or more of the banks will risk a tussle with the competition regulator, as Abbey National's shares rose for the second successive day, closing up 5.5p to 572.5p. That was a premium to Santander's mainly paper offer, valued yesterday at 550p a share.

It also emerged that Standard Life Investments has ditched almost all of its stake in Abbey, having sold off 12.4 million shares in two days. Fidelity has also reduced its stake. There was speculation that the US investment house Brandes, which holds nearly 10 per cent of Abbey, believes Santander is not offering enough for the bank.

A number of hedge funds have bought shares in the past few days. Paul Mumford, at Cavendish Asset Management, said: "It is a gamble each way - either that the Santander share price will recover, raising the value of the bid - or Abbey will receive a higher offer."

If Santander does prevail, it will have a tough time competing in the UK's mortgage market, Mr Crosby predicted, saying it was "the most fiercely competitive in the developed world".

HBOS also saidpre-tax profits for the six months to 30 June rose 21 per cent to £2.16bn.

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