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Santander front-runner for Abbey as HBOS pulls out…

HBOS last week dropped its plans to make an offer for its biggest rival, Abbey, leaving the way clear for Spanish bank Banco Santander Central Hispano.

HBOS&#39 statement, issued to the stock exchange last Wednesday, says: “Notwithstanding the very substantial opportunity to create synergies, and a strong competition case with which to engage the regulators, HBOS has decided not to proceed with an offer for Abbey.

“HBOS believes the shareholder value inherent in its existing prospects is superior to that likely to be achieved through this combination.”

The announcement also seems to secure the future of Birmingham Midshires following City speculation that to mount a successful bid for Abbey, HBOS would have to dispose of its specialist subsidiary.

Also last week BSCH issued the detailed documents on its bid to Abbey shareholders who will meet to vote on the deal on October 14.

The Spanish bank launched a charm offensive targeting IFAs and brokers by sending letters to around 80,000 advisers in a bid to calm concerns that a takeover would mean a focus on branches rather than brokers.

There were rumours that BSCH was looking to increase the number of mortgages sold through branches to 50% at the expense of intermediaries but the bank instead pledged to increase the number of home loans sold through intermediaries if it bought Abbey.

In the letter, Juan Rodríguez Inciarte, executive vice-president of Banco Santander, describes the strong presence Abbey already has in the UK. He cites an independent survey showing that 26% of intermediaries believe that Abbey has the strongest presence in the mortgage market.

He says: “These figures underline how important you will be to our future success as well as the importance of an independent Abbey to the competitiveness of the UK mortgage and other financial services markets.”

He adds: “Our aim is to drive business in all our channels, maximising business through Abbey&#39s existing brand in the intermediary market and increasing branch-based volumes.”

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