7,000 back-office jobs to go at Abbey if Santander succeeds

Santander Central Hispano plans to eliminate nearly 7,000 back-office jobs at Abbey National if its £8.2bn bid succeeds.

The figure is higher than had been indicated, with Abbey executives and unions expecting about 2,500 jobs to go if Santander took the bank over.

Santander's odds appeared to improve when Luqman Arnold, the chief executive of Abbey, said he had serious doubts about the chances of a potential rival offer from HBOS succeeding.

HBOS said last week that it was looking at a potential bid. It is understood that the Takeover Panel will shortly give it a deadline by which time it would have to say whether it will proceed.

Mr Arnold told The Independent on Sunday that the Competition Commission would almost certainly kill the chances of another UK bank taking Abbey over. "It is highly improbable that a UK bank would avoid a referral and most would have a close to zero chance of getting though."

A long competition investigation could harm Abbey greatly. "I don't want the risk of a Safeway situation," Mr Arnold said, referring to the deterioration at the supermarket group during the year-long bid battle. "And there is the risk of the bird in the hand flying away."

Santander is keen to win Abbey and is said to be considering improving the cash element of its offer, or even increasing the value of the bid, to counter any threat from HBOS.

The Spanish bank believes it can save £200m a year by running Abbey's IT operations on Santander's computer system in Spain and cutting its UK IT staff.

Currently, a third of Abbey's 26,000 staff are employed in its back office. Santander sources point out that the figure for UK rivals is less than 25 per cent, its main banking operation in Spain is 12 per cent, and at its Banesto subsidiary it is just 6.5 per cent.

"We would aim to get the Abbey ratio down to the Banesto level," said a well- placed source.

This would point to 7,000 jobs being lost. Santander hopes to redeploy most of the affected staff in customer-focused jobs at Abbey.

Abbey currently operates 11 different computer systems running nearly 500 applications. Santander would cut the applications to 200 and run them off just one system.