Abbey's largest investor Brandes sells down stake

Abbey National's biggest shareholder offloaded stock worth £817m earlier this week.

Abbey National's biggest shareholder offloaded stock worth £817m earlier this week.

Brandes Investment Partners, the publicity-shy American value investor, trimmed its stake to 8.67 per cent of under-offer mortgage bank, pocketing a healthy profit in the process.

Shares in Abbey and its prospective buyer Banco Santander of Spain have been chased higher amid growing City support for a counter bid by a British bank. One sector analyst said: "Brandes didn't get into Abbey until earlier this year. They must be one of the few investors to actually make money out of the bank."

Abbey shares slipped 5p to 581p yesterday, as news of the sale emerged. But experts were quick to dismiss suggestions that Brandes' move signalled a cooling of interest from potential UK predators.

HBOS, the country's biggest mortgage lender, is widely tipped to table a hefty bid after Santander publishes its offer document next month. Fund managers reckon that could be as high as 650p a share, a 17 per cent premium to Santander's agreed bid.

HBOS was formed when Halifax, the former building society, merged with Bank of Scotland. James Crosby, the chief executive of HBOS, wrung savings of £807m from the deal.

The City believes HBOS is best placed to benefit from similar savings this time. "HBOS can squeeze far more out of Abbey than the Spaniards," one analyst said. "It can keep Abbey's customers and its book, use its own platform, and basically shut down the rest of it."

But any UK buyer looking to slash jobs and branches is likely to face stiff opposition from unions and the Government. Should HBOS throw its hand into the ring, it is likely to be followed by Lloyds TSB. Competition authorities blocked an earlier move by Lloyds for Abbey, and any offer from a domestic bank this time is likely to trigger another lengthy inquiry. A combination of HBOS with Abbey would see one-third of all UK mortgages held under one roof.

Santander does not face competition issues here and EU authorities have fast-tracked the bid. Many fund managers favour a deal with HBOS over Santander, preferring paper from a UK company.