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Abbey takeover to create world’s eighth largest bank

Abbey takeover to create world’s eighth largest bank

(27 July 2004 – UK) Britain’s Abbey National is set to be purchased by Spain’s largest bank, Santander Central Hispano, for some £8.6 billion (A$22.2 billion) in a deal that would create the world’s eighth largest bank. Abbey management is expected to recommend shareholders to accept the bid, worth somewhere between 550 pence and 580 pence a share.

The deal would mark the first time a large UK bank has been bought by a European one.

However, Britains "big four" – Royal Bank of Scotland, Barclays, HSBC and Lloyds TSB – are expected to consider tabling a counter bid for Abbey, which is the sixth largest bank in the UK and the second largest mortgage lender.

Lloyds TSB tried to buy Abbey in 2001 but was turned down as Britain’s Competition Commission ruled the merged bank would have too big a share of the business and personal current account markets.

Since then, HBOS, which was formed from Halifax and Bank of Scotland, has created an effective rival to the big four, leading analysts to believe the competitive environment has changed.

There is some talk of Citigroup also making a bid for Abbey to boost its retail presence in the UK.

Santander Central Hispano is the biggest bank throughout Latin America as well as Spain.

In further UK news, JPMorgan Chase is considering whether to lay out £1.4 billion for British online bank Egg. The US bank is reportedly negotiating with Prudential, which owns 79 percent of Egg.

Egg was put up for auction in January and has reportedly elicited interest from Royal Bank of Scotland, Citibank, HSBC and US card companies MBNA and Capital One.

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