Abbey confident of investor backing

Abbey National's chief executive, Luqman Arnold, has said he expects no problems in getting approval from 75 per cent of shareholders for an £8.2bn bid from Santander Central Hispano, Spain's largest bank.

Mr Arnold, who was speaking to the Spanish newspaper El Pais, added that Santander's recommended offer was "reliable and will not cause problems with the competition authorities, as might happen to someone else".

HBOS, Britain's fifth largest bank, has appointed the investment bank Lazards to help it consider whether to mount a counter-bid for its rival.

Abbey is 30 per cent owned by private investors, mostly comprising those who held on to their allocation after the group demutualised 15 years ago. Many of these will have to be won round for the bid to be voted through.

Meanwhile, Abbey pushed ahead with its rationalisation and restructuring plans yesterday, announcing the sale of its French residential mortgage arm to BNP Paribas, France's second largest bank. Abbey said the parties were in advanced discussions to sell the business, which has 12 branches in France's biggest cities and a loan book of more than €2.6bn (£1.7bn).

Abbey said: "The sale ... represents a further step in Abbey's strategy of focusing solely on providing personal financial services in the UK, announced at its annual results in February 2003."

The deal will be the latest in a series of acquisitions for BNP, which plans to spend €2bn expanding its consumer finance operations this year.

Abbey's shares closed down 2.25p at 575.5p, giving the group a market value of £8.4bn. Santander's cash and shares offer is worth 533p a share, a discount of almost 8 per cent to where the stock is now trading.