Halifax-to-Bank of Scotland group HBOS today said it had pulled out of a potential takeover battle for Abbey National.
The announcement that it will not be bidding clears the way for Spain’s Santander Central Hispano after it agreed a deal with Abbey in July.
HBOS said its decision, which followed weeks of speculation, came despite a “very substantial opportunity” for potential savings and a strong case on competition issues.
The news will boost Abbey staff who feared a successful bid from HBOS would spark a cull of branches and far more job losses than the 3,000 proposed by Santander. Around 70% of Abbey's 741 branches are within a quarter of a mile of an HBOS branch.
Analysts believed HBOS could achieve £770m (€1.1bn) in cost savings and increased revenues, while securing 34% of the mortgage market and almost 25% of savings accounts.
But, in a statement, HBOS said the value of its existing prospects was superior to that likely to be achieved through the combination.
Santander confirmed today that it would look for savings of €450m (£300m) in a move that would result in the 3,000 job cuts.
The Spanish bank does not have a branch network in the UK and will seek efficiencies through improvements to IT systems. Abbey currently has a 26,000-strong workforce.
Completion of its takeover of Abbey is expected on November 12 – in the absence of a rival bid.