HBOS is close to Abbey rival bid

SPAIN'S Banco Santander will win clearance from the European Commission on Friday to proceed with its planned £8.7bn acquisition of struggling High Street bank Abbey National.

But its plans may be scuppered by HBOS, which could launch its expected rival bid for Abbey as early as this week.

It is understood HBOS does not believe it necessary to wait for the Spanish bank's offer document detailing its bid, which is likely to be sent to Abbey's shareholders towards the end of the month.

Any offer from HBOS is likely to be conditional on getting clearance from the Competition Commission. It is also expected to contain a disclaimer that it will proceed only if it can live with any terms imposed by the commission.

A competition inquiry is almost certain because a combined Abbey and HBoS bank would have 40m customers and 35% of the mortgage market.

One banker said: 'It may be the commission gives clearance as long as HBOS sells something or cuts back on some businesses. That may make the deal less attractive to HBOS. It might not want to proceed in those circumstances.'

A counterbid from HBOS is likely to encourage other banks to enter the ring, or at least to seek guidance from the Competition Commission. An inquiry could take as long as a year.

One analyst said: ' Investors have to think carefully about whether they want money now from Santander or are happy to wait for a deal that may or may not be allowed to proceed. And there is also no guarantee that HBOS will come up with terms that, in the end, better Santander's.'