Spain's Banco Santander Central Hispano looked on course to secure Abbey National last night after two major developments in its battle for the bank.
The takeover bid was given the go-ahead by the European Commission (EC) hours after HBoS announced it would not be making a bid for the lender.
Emilio Botin, chairman of Banco Santander, described the EC backing as an important step forward, which paved the way for the expected completion of the offer in November.
He said: "I am delighted to confirm that our recommended acquisition of Abbey has received approval from the European Commission, as we have always remained confident it would."
Analysts said the decision by HBoS made it unlikely a UK bidder would rival the £8.5bn offer from Santander, which was made in July.
Unions feared that if HBoS was successful, widescale job cuts would follow as 70 per cent of Abbey's 741 branches are within a quarter-of-a-mile of an HBoS branch.
HBoS chief executive James Crosby said: "From our point of view, Abbey was a one-off opportunity that we had to crawl over. We were as confident as we could be about the competition case. We did a lot of work and identified very substantial synergies that were in excess of those that the market was talking about."
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