Abbey embroiled in 'suicide' riddle

ABBEY National is caught up in a suicide investigation - a difficult distraction for the mortgage bank which is waiting to see if a counterbid scuppers its £8bn takeover by Banco Santander of Spain.

An Abbey employee, Richard Chang, fell to his death on 13 July from a fifth floor balcony at the group's headquarters in London.

Chang apparently committed suicide shortly after being quizzed by corporate investigators Kroll, which are conducting an internal inquiry for the bank.

Kroll was called in to try to discover who sent an abusive anonymous document to Abbey managers, accusing senior staff of impropriety regarding contracts awarded to third parties.

Abbey refused to comment, but it is understood that the Metropolitan Police have looked into the circumstances surrounding Chang's death. The death has no direct relevance to the bid situation, but adds to the burden on Abbey's chief executive Luqman Arnold.

The takeover by Banco Santander has met with a lukewarm response from those investors who do not want shares in a Spanish company. Santander has offered one share plus a 31p special dividend for every Abbey share.

Analysts at Citigroup point out that the special dividend will be paid out of the combined group's resources, so they expect the company to fall in value when it is paid. They are also sceptical about cost savings targets.

A counterbid from HBOS looks likely. British banks can justify a higher bid price because there would be greater merger savings.

Some of Abbey's key shareholders are concerned about the corporate governance of Santander under executive chairman Emilio Botin, since three of his children are on the board.

Santander directors could get five times their pay if sacked. A spokesman said: 'Santander has long been a pioneer in improved corporate governance standards in Spain.'