The predators with an eye for Abbey's suitors

ABBEY has had more suitors than Faria Alam but, unlike the former FA secretary, it has yet to consummate a relationship. And now its plan to wed Spanish lover Banco Santander is under threat after spurned rival HBoS confirmed that it might gatecrash the service.

HBoS is still hammering out the pre-nuptial details with its advisers, but is now almost certain to launch a counter offer for Abbey's hand next month - probably just before Santander shareholders hold an extraordinary meeting to approve the Spanish acquisition.

But HBoS is unlikely to walk down the aisle alone. It is set to be quickly followed by Lloyds TSB and possibly Barclays, not to mention HSBC, the only one able to pay in cash. Only Royal Bank of Scotland appears immune to Abbey's charms.

There could be several reasons for this. RBS has a long-standing relationship with Santander - the Spanish bank even helped with financing when RBS acquired NatWest - and may be loath to upset that.

Or it might just see better opportunities overseas for deals that would transform its business. Abbey would not do that.

RBS is believed to have held preliminary takeover talks with Germany's second-biggest bank, HVB, and chief executive Sir Fred Goodwin is thought to be interested in China, where the potential is vast.

But the more likely reason is that RBS believes the Competition Commission would block all overtures from major UK banks. Such a decision would take months to reach, but in the meantime would leave all the banks in a state of limbo, ratcheting up costs and distracting the attentions of senior management.

Abbey has been down this path before. When it aborted merger talks with Bank of Scotland - which subsequently dusted off the takeover documents, substituted Halifax for Abbey and created HBoS - Lloyds TSB charged in on a black horse.

But its putative offer was blocked by the Competition Commission, which calculated that a combination of Lloyds TSB and Abbey would control slightly more than 30% of Britain's current accounts, leaving it in a dominant position.

It also argued that the merger would remove a main source of competition to the big four High Street banks. In short, Abbey played a vital role as a well-established rival. Despite its recent difficulties, it is a role Abbey still plays.

Virtually every combination of a High Street bank and Abbey would create a dominant position in at least

one market. An HBoS tie-up with Abbey would create Britain's biggest mortgage provider, financing 35% of all home purchases. It is certainly true that the mortgage market is highly competitive, with more than 100 providers, and that Britain is now a nation of promiscuous borrowers - about 40% of all transactions are actually homeowners remortgaging for the latest and best deal.

But while HBoS may argue that this means it would be almost impossible to dominate, the fact remains that a 35% market share is a monopoly position by any definition.

And there has been no hint from the Competition Commission that it has changed its view on the importance of Abbey, or that it would allow one bank dominance in such a vital marketplace.

The rush for Abbey has all the hallmarks of last year's battle for Safeway, where Morrisons' bid forced Sainsbury to counterbid to avoid being caught between three big supermarket groups. Tesco and Asda joined in - they knew they would not win Safeway, but they were darned if they were going to miss out on the fight. Santander will be aware that Morrisons won in the end.

It is not just Abbey that is being hotly pursued. Britain's banks made pre-tax profits of £16 billion over the first six months of 2004 and are among the most efficient in the world, so it would not be surprising if overseas banks were looking at them with interest.

Citigroup, Bank of America and possibly JP Morgan Chase, are almost certainly considering bidding for a British bank. American banks are not allowed to control more than ten% of deposits in most states and these three giants are approaching that limit, making further purchases at home unlikely.

Britain is interesting because the banks speak the same language, offer similar products and are not strangled by employment laws that make redundancies difficult, or bureaucratic working practices.

Bank of America is believed to have held talks with Barclays last year, but sources claim the Bank of England stepped in and said that the timing was not right for a US takeover of a British bank. That position is now likely to have changed.

Indeed the suitors of Abbey, with the exception of HSBC, which is just too big, might find themselves the object of American affections. It would indeed be an interesting bidding battle.

And once again RBS, with its big US operation acting as a deterrent, could be watching from the wings.