IT now looks likely to be plain sailing for the Spanish takeover of Abbey National. This follows on from last week, when the man from HBoS - he say No.

The market had expected HBoS, the merged entity of Halifax and Bank of Scotland, to put in a rival bid, but last Wednesday they decided not to bother. If anybody else wishes to make a bid for Abbey National, they have until the end of the month, effectively, being two weeks before Abbey holds an extraordinary general meeting.

Banco Santander is looking to turn around the business of Abbey National through cost savings. The new computer systems in place will be revamped, again, and the intensive staff training undergone in the past year will be redone. This will all come at a cost of £462m. Santander is expecting to recoup this, and more, by year three, and expects to be selling more products from its branches.

Although the Spanish bank has experience of mergers and acquisitions, these have been predominantly in Spain or Spanish-speaking countries in South America. The banking culture in these areas have been similar. Don't expect Abbey National to take up the custom of a siesta in the afternoon though.

If the Spaniards are keen to get more people coming through the door, perhaps they could put tapas on display.

The formal offer documents are expected to have just been posted out. One serious matter yet to have been ironed out is that the Spanish shares being offered will be subjected to the Spanish withholding tax at 15 per cent on dividends. The group intends to apply for a UK listing for its shares, but this is far from being an easy process. Even Santander does not believe that any UK listing would be in place before well into the first half of next year.

Abbey National has a first-class mortgage operation, but has encountered problems in other business areas, where it had little experience. There remains serious doubt over whether or not Banco Santander can rectify these other areas.

Turning to the rest of the stock market, the FTSE has held on to the recovery at the end of last month, pushing above the 4550 level. Projections of increased interest rates have had to be pared back, and the lack of any further increase earlier in the month has provided support for equity and bond valuations.

In a generally quiet week for results, Harry Potter will take centre stage today. Bloomsbury, the publisher of the Hogwarts hero, reports its half-year numbers today. The latest Potter film is sure to be good news, but at its annual meeting in June, the company stressed that it was more than a one-hit wonder. The company must wish it had a magic wand and be making the same money as author JK Rowling.

Tomorrow sees house builder Barratt Developments report full-year results. It has already promised to deliver its 12th successive year of profits growth. Barratt's average selling price increased by eight per cent in the year to June 30 to £165,000, but this year it expects prices to rise by only four to five per cent. Arguably, the share price already discounts a rather more dramatic slowdown in the housing market than Barratt is, itself, predicting.

* For investment advice contact Anthony Platts on 01642 608855.

Published: 21/09/2004