HBOS fury as EU backs Santander's Abbey bid

HBOS, THE Halifax and Bank of Scotland group that is considering whether to make a bid for Abbey National, yesterday reacted furiously to a statement from Mario Monti, the European Union Competition Commissioner, which appears to welcome Abbey being taken over by Santander Central Hispano of Spain.

HBOS, THE Halifax and Bank of Scotland group that is considering whether to make a bid for Abbey National, yesterday reacted furiously to a statement from Mario Monti, the European Union Competition Commissioner, which appears to welcome Abbey being taken over by Santander Central Hispano of Spain. This pre-empts Mr Monti's own European Commission, which on 17 September will release the results of a study into the effects of an Abbey-Santander combination on bank competition.

At a press conference in Cernobbio, Italy, Mr Monti reportedly said: "It is one of the first cross-border transactions in the banking sector, and it will increase the integration of the common market and that of financial services."

The sentiment, and the unconditional tense in which it was expressed, provoked HBOS into a bitter statement. It said: "These are worrying and inappropriate comments from Commissioner Monti. The Commission must ensure as a matter of priority that merger investigations are conducted in a completely impartial and transparent way.

"These remarks are akin to a judge commenting on a case before the trial is heard. We hope that Mr Monti is not putting any inappropriate pressure on the decision-making process. We will be asking the Commission for clarity about his remarks at the earliest opportunity."

HBOS is the only company to have sent a complaint to the EU Competition Commission in response to the review of Santander's bid for Abbey. HBOS wants the commission to force Santander and Royal Bank of Scotland to unwind their cross-shareholdings before Santander be allowed to buy Abbey. RBS has a 2.83 per cent stake in Santander, which holds 5.15 per cent of RBS.

The speed and strength of HBOS's riposte indicates how keenly it regards Abbey, after four weeks of intensive research into the feasibility of mounting its own takeover for the bank.

HBOS refused yesterday to comment on reports that it had postponed from last week to this a board meeting to decide on whether to rival Santander's approach. Sources close to HBOS said the decision had been taken last month to delay the planned 2 September meeting because that would not have given enough time for the detailed research into Abbey.

Santander has said it wants to buy Abbey for £8.6bn, but the formal offer will not be made until later this month. Some observers believe Santander will have until the Commission report is published in 11 days. That may in turn affect the timing of any approach from HBOS. Should HBOS bid, analysts expect other UK banks to join the fray, at which point the Office of Fair Trading would almost certainly have to refer the auction to the Competition Commission.

Abbey National shares closed at a 2004 high of 610.25p on Friday, up 5.25p.