A CULL of local branches is feared if HBOS mounts a successful bid for Abbey National, Britain’s sixth-largest bank.
Two-thirds of Abbey’s 740 branches are located within half a mile of one owned by HBOS. The overlap is expected to result in scores of closures and job losses.
An HBOS spokesman declined to be drawn on what the outcome would be. He said: “It would be extremely premature at this stage to speculate about branch closures.”
A total of 530 Abbey branches are located within half a mile of an HBOS outlet. Of these, 472 are within a quarter of a mile and 232 are within 176 yards. Lawyers said closures could also raise competition issues and reduce choice for consumers.
Martin Baker at Taylor Wessing, a law firm, said if HBOS did make a bid for Abbey, it would be referred to the Competition Commission.
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He added that the combined share of the mortgage market, based on annual advances, would be 36%. The nearest competitors would then be Barclays with 9.8% and Lloyds TSB with 8.7%.
Baker said: “There would have to be some very serious undertakings by HBOS to dispose of a large part of the portfolio, which you would have thought would negate some of the reasons for the deal.”
Bank unions are also concerned about the number of potential job losses. Some analysts estimate these could run to 9,000. This would be at least twice the figure if Abbey were taken over by Spain’s Banco Santander Central Hispano.
So far Emilio Botin, Santander’s chairman, has refused to be drawn on the figure. But an HBOS spokesman called on Botin to clear up the confusion “once and for all”.
Meanwhile, institutional shareholders are attempting to drum up more interest in Abbey from other British banks. Top of the list is Lloyds TSB, which had to withdraw a bid three years ago on competition grounds.
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David List of Morley said: “We would support another attempt by Lloyds TSB to bid for Abbey. A Lloyds deal would make sense now, particularly given its strategic bind.”
The majority of institutional fund managers say they would prefer Abbey to be bought by a British bank than a foreign one. One investor said: “Santander’s offer is fine if it’s the only one on the table, but we’d much rather see a UK solution.”
List said: “We would prefer a British merger. First, nobody particularly wants Santander paper. Also, the synergies of a merger between Abbey and HBOS or Lloyds would clearly be far greater than with the Spanish bank.
“We would benefit from these synergies by holding British paper rather than selling off Santander’s.”
Shareholders also indicated they would be prepared to wait for the results of a Competition Commission inquiry in order to achieve a UK solution.