HBOS dismisses Santander claims

THE boss of HBOS, Britain's biggest mortgage lender, dismissed as 'rubbish' claims by Spain's Banco Santander that it can transform rival Abbey with its new computer system.

James Crosby's comments came as he unveiled record £2.16bn half-year profits, which will enrage consumers who face higher overdraft charges and longer cheque clearing periods on basic banking accounts.

Santander sent shockwaves through the UK banking community with its £8.9bn bid for Abbey this week. It claims it can restore Abbey's fortunes with state-of-the-art information technology.

Crosby said: 'We won't be sitting back and making it easy for anyone, no matter where they come from. A source close to the Spanish bank said: 'Well he would say that, wouldn't he?'

HBOS shares rose 19p to 694p. Its 2.5m small shareholders are in line for a 10.8p half-year dividend.

Speculation that Crosby might gatecrash the Abbey bid looks optimistic as an HBOS assault would be likely to fall foul of competition authorities even though its share of new mortgage loans has dropped to 17% from 23%. Other possible bidders for Abbey, up 5 1/2p to 572 1/2p, include Citigroup and Lloyds TSB. Santander fell 5.28p to 522p.

US investor Fidelity sold 11.2m Abbey shares at an average price of 560p, taking its holding, recently 3.7% down to 1.12%. Crosby said the housing market remains 'in really good shape' and forecast that interest rates will peak at 'historically low levels'.