Abbey shares soar 16%

Shares in troubled banking group Abbey National soared 16% today after it confirmed it had received a takeover approach.

The stock jumped to more than 570p, valuing Abbey at just over £8bn (€12bn), after it said an unnamed party had made an approach “which may or may not lead to an offer being made for the company.”

An Abbey spokeswoman refused to give details, saying only that it would make an announcement “in due course as appropriate”.

City speculation about the potential bidder immediately focused on Spain’s biggest bank, Banco Santander Central Hispano (BSCH).

A newspaper report in May claimed that BSCH had expressed interest in a takeover of Abbey.

BSCH did not make an offer and discussions were not thought to have progressed beyond the initial stage, the report said.

Hilary Cook, of Barclays Stockbrokers, said Santander appeared to be the most likely bidder.

“If Santander has aspirations of being pan-European, it needs to be in the UK,” she said.

“If it comes out with a generous offer, it will be tough for Abbey not to justify offering it to shareholders.”

Market talk also focused on the possibility of a renewed approach from a UK bank.