HBOS, Britain’s fifth biggest bank, has formally complained to the European Commission about the close ties between Royal Bank of Scotland (RBS) and Santander Central Hispano, the Spanish bank that is bidding more than £8 billion for Abbey.
Santander and RBS own shares in each other and have non-executive directors in common.
HBOS is expected to launch a counterbid for Abbey, and is already understood to have been given access to its books.
HBOS claims that if the Santander bid succeeds it would be “inappropriate for the relationship to continue”. It argues that a deal between Santander and Abbey would give RBS influence over the latter’s strategy, which “would not be acceptable”.
Sir George Mathewson, the chairman of RBS, sits on the board of Santander. Emilio Botin, the Santander chairman, and Juan Inciarte, the Spanish bank’s European executive vice-chairman, sit on the board of RBS.
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RBS holds a 2.8 per cent stake in Santander, while Santander holds 5 per cent of RBS. In addition to demanding that the two banks end the cross-directorships, HBOS wants the European Commission to extract a guarantee from Santander that it will not enter into a partnership with RBS in the future.
A spokesman for HBOS said: “We have seen considerable press speculation over whether RBS has some kind of side agreement with Santander. We are asking the Commission to press for verification on this point. They should lay their cards on the table.”
HBOS also intends to send its submission to the Office of Fair Trading in the UK, which will automatically investigate the takeover.
HBOS’s decision to lobby the European Commission — which is expected to clear the bid by September 17 — came as Señor Botin held talks with Abbey’s in-house union.
The Santander chairman said that the Abbey takeover would lead to around 3,000 job losses over three years from a total workforce of 25,000.
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The bank is hoping to avoid compulsory redundancies, given that about 1,000 staff leave Abbey every year.
Spain’s biggest bank also said it would offer all Abbey employees 100 Santander shares on the completion of the deal — worth more than £500 for each worker at yesterday’s share price.
The union representing Abbey employees said it would support Santander’s offer if a bidding war broke out against another British bank, where the job losses would almost certainly be higher than 3,000. Santander also said it had written to Abbey’s pension fund administrators to guarantee the pension rights of Abbey’s employees and former employees.
Linda Rolph, head of the Abbey group union said: “If a UK bank comes in, there is potential for more job losses in the branch network.”
She added: “It is early days, but we felt the meeting went really well. We feel much happier meeting Señor Botin.”
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Santander believes it can reduce costs by $450 million over three years through the “application of Santander’s skills and technology”.
Most of the savings are expected to come from changing Abbey’s information technology platform and integrating it with Santander’s.