THE mystery suitor stalking Abbey National was last night unveiled as Spanish bank Banco Santander Central Hispano.

Spain's biggest bank said in a statement that it was holding conversations with Abbey that could lead to an offer for the UK bank.

In a statement earlier yesterday, Abbey confirmed that it had received an approach, but refused to comment further.

The announcement from BSCH, to which Abbey drew attention in a second statement issued yesterday, said: "Grupo Santander states it is holding conversations with Abbey National.

"It is not possible to determine whether such conversations will result or not in an offer."

After Abbey's first announcement, shares in the group rose 16 per cent, valuing it at slightly more than £8bn. After Santander's statement, they were still more than 15 per cent, or 77p, ahead at 570p.

Speculation in the City about a takeover of Abbey has been rife in recent months.

A newspaper report in May claimed that BSCH had expressed interest in Abbey, although it said the Spaniards had not made an offer and discussions had apparently not moved beyond the initial stage.

Hilary Cook, of Barclays Stockbrokers, said Santander needed to be in the UK if it had aspirations of being pan-European.

"If it comes out with a generous offer, it will be tough for Abbey not to justify offering it to shareholders," she said.

Earlier, market talk had also focused on the possibility of a renewed approach from a UK bank.

In 2001, Lloyds TSB failed in an £18bn bid for Abbey after the Government blocked the move on competition concerns.