Santander confirms A&L takeover deal

Spanish bank and Abbey owner Santander confirmed a £1.26bn proposed takeover of lender Alliance & Leicester today.

The news follows A&L's earlier announcement that it was "at an advanced stage of discussions" with a mystery suitor, causing shares to jump almost 50 per cent.

The proposed deal gives A&L - which can trace its history back to 1852 - the security of a bigger financial platform after a year when banks have been buffeted by the credit crunch.

Santander made its announcement to the Spanish stock market.

It plans to merge the business with Abbey and "increase its critical mass" in the UK market, with the deal planned for completion in October.

A&L's acting chairman, Roy Brown, said the board had recommended the offer "after careful consideration".

He said: "A&L is a strong and attractive business and its resilient performance is proof of the quality of its franchise.

"However, the board is acutely aware of the significant external risks presented by the deterioration in economic conditions and the continuing turbulence in the financial markets.

"Against that background, the proposal from Santander represents value for shareholders, and the combination of A&L with Santander's UK operations is an excellent fit."

Santander is Europe's biggest bank and the world's sixth largest by market capitalisation.

Chairman Emilio Botin said: "We are very pleased to be working with the management and employees of A&L as we seek to build with Abbey one of the leading franchises in the UK banking sector."