UK FSA: No reason to block Abbey takeover

Spain’s largest bank received another boost in its bid to secure Abbey National tonight when the City watchdog said it saw no reason to block the deal.

Although no formal decision has been made, the UK's Financial Services Authority (FSA) said it saw “no material impediments” to the proposed takeover by Banco Santander Central Hispano (SCH).

It came on the eve of a meeting of Abbey shareholders, who are due to vote on the bid worth around £8.5bn (€12.4bn).

The FSA said in a statement that it “may be helpful” in advance of the extraordinary general meeting to note that at this stage it saw no reason to block the takeover.

The watchdog has up to three months to examine whether the deal should go ahead, but would not say when the process started.

A spokeswoman for Abbey said: “This is welcome news on the eve of our EGM.”

Shareholders at tomorrow’s meeting at Wembley conference centre, north London, are expected to give the go-ahead to the deal.

A major development in SCH’s battle for the bank occurred last month when rival Halifax-to-Bank of Scotland group HBOS walked away from making an approach.

The takeover bid was given the green light by the European Commission on the same day.

And earlier this week, the Spanish bank said it would allow Abbey investors with 2,000 or fewer shares and who live in the UK to use its free share dealing facility without needing to complete a Spanish tax form.

Abbey has about 1.7 million small shareholders who received windfall shares when it converted from a building society in 1989.

Members received up to 100 free shares if they held savings with the group and up to 100 if they had a mortgage with it, giving a maximum of 200 windfall shares per person.

If the deal is given the go-ahead by Abbey shareholders tomorrow and Banco Santander investors next week, it is expected to be completed in November.