HBOS, the banking group that includes Halifax and Bank of Scotland, has offered to buy Abbey National's motor finance business.
The group is thought to be willing to pay around £150m for the business, which is part of First National, Abbey's consumer credit arm.
Abbey has embarked on a major strategic review that will be published late next month and which will include the disposal on non-core assets. The review was launched by Luqman Arnold, who was hired as chief executive in October to focus the company on its core business after a disastrous period of diversification.
First National was put up for sale in September and analysts believe that the business could raise as much as £800m.
It is understood that as many as eight potential buyers have made an approach for the motor finance unit although the process is still at the memorandum stage.
HBOS has sought to diversify its operations as much as possible and has moved into areas such as corporate banking and into fund management, with its £61m purchase last year of the asset management business of NM Rothschild. Insight Investment, its fund management arm, aims to become a leading player with more than £100bn of assets by 2007.
HBOS already has interests in the sector after launching a joint venture with the car and truck distributor Lex Service four years ago. Under the deal the bank paid £162m for a 50 per cent stake in Lex Vehicle Leasing, and it has since provided around £800m of loans.
It is one of the leading suppliers of car finance to consumers and through dealerships. It has partnerships with car makers such as MG Rover and large franchised dealer groups including Reg Vardy.
HBOS and Abbey National declined to comment on the report yesterday.
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