UK bank HBOS said it would write to the European Commission to complain about Santander Central Hispano's continuing ties to Royal Bank of Scotland despite the Spanish bank's bid for Abbey National.
But a source familiar with the situation said yesterday the EC was still likely to clear Santander's agreed £8-billion-plus (€11.9 billion) takeover offer for Abbey by September 17th despite HBOS's complaint.
In the unlikely event that the commission did find problems with the bid, they could be resolved with a minor fix that would delay approval by no more than two weeks, the source said.
HBOS itself is considering a counterbid for Abbey and if it goes ahead with an offer experts say it would likely run into UK competition hurdles.
"We will be writing to the commission to express our concern about the cross shareholdings between RBS and SCH," an HBOS spokesman said yesterday.
"In the event that SCH acquires Abbey National, we believe that it would be unhealthy for board directors from both banks to sit on each other's boards.
"At a very minimum we believe that the cross director representation should cease.
"Despite what the companies say, it is hard to ignore the fact that any cross director representation looks like a cosy gentlemen's club."
The HBOS spokesman said no decision had yet been taken about a bid. Experts say a bid by any large UK bank for Abbey National is likely to trigger a six-month probe by Britain's competition authorities.
A spokesman for Spain's largest bank said it would be prepared to alter its ties with Royal Bank if the competition authorities required it, but said he did not believe Santander's bid for Abbey necessitated a change to its links with Royal Bank because they already compete in several markets.
A spokeswoman for Royal Bank of Scotland said the group continued to watch HBOS's comments with interest but declined to be drawn on whether it would alter its ties with Santander.
Santander has had an alliance with Royal Bank since 1988, and each company's chairman sits on the other's board.
The HBOS spokesman said the bank would also ask the Commission to verify that Royal Bank and Santander have no verbal or written agreement that would allow Royal Bank to take on any of Abbey's back-office operations in the event of a Santander takeover of Abbey.
Mr Alastair Gorrie, a competition partner at law firm Coudert Brothers, said the commission, which is currently examining Santander's application to bid for Abbey, would now have to look at the issue of Santander's ties to Royal Bank. - (Reuters)
