Abbey 'takeover rumours rage on'

Speculation over a bidding war for Abbey National refused to die down today amid reports two more UK groups were reviewing their positions.

Lloyds TSB and Royal Bank of Scotland emerged in the spotlight after Halifax owner HBOS confirmed last week it was considering an approach in light of the £8.2bn offer from Banco Santander Central Hispano (BSCH).

The interest from HBOS has put the rest of the sector on standby, even though UK authorities blocked an £18bn offer from Lloyds TSB three years ago.

A full-blown auction, which could see Abbey’s value rise to £9bn, comes as the City also speculates on a £45bn offer for Barclays from the world’s largest bank Citigroup. Rumours of an approach from the US giant sent shares in the UK’s third biggest bank up by 10% on Friday.

Among reports today, the Observer said a team of senior of executives at Royal Bank of Scotland had been weighing up the bank’s position on Abbey, while the Mail on Sunday said financial advisers are to be appointed by Lloyds TSB. Both are thought to be keen to be prepared in case a UK rival enters the fray.

That move could come from HBOS, which the Sunday Times said may make its move within the next seven weeks – prompting BSCH to raise its own offer.

The BSCH deal, which secured the support of the Abbey board last month, has so far received a lacklustre response from investors, many of whom are said to be reluctant to receive shares in a Spanish company.

One report over the weekend said BSCH may look to pre-empt a bidding war by improving the terms of its cash-and-shares offer. In doing so, it would prevent Abbey being drawn into a lengthy inquiry by competition authorities.

Both Lloyds TSB and Royal Bank of Scotland declined to comment on today’s reports.