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| Santander makes A&L bid approach | Santander makes A&L bid approach |
| (about 1 hour later) | |
| Abbey owner Santander has made a takeover approach for Alliance & Leicester (A&L), the BBC's business editor Robert Peston has learned. | Abbey owner Santander has made a takeover approach for Alliance & Leicester (A&L), the BBC's business editor Robert Peston has learned. |
| Shares in A&L have soared by more than 40% after it disclosed that it had received the approach, which would value the bank at about £1.3bn. | Shares in A&L have soared by more than 40% after it disclosed that it had received the approach, which would value the bank at about £1.3bn. |
| The bank, which has not yet confirmed the name of the possible buyer, said it was in "advanced" discussions. | The bank, which has not yet confirmed the name of the possible buyer, said it was in "advanced" discussions. |
| Our correspondent says the deal may pose competition issues. | Our correspondent says the deal may pose competition issues. |
| If successful, Santander plans to merge A&L with Abbey, which it bought in 2004. | If successful, Santander plans to merge A&L with Abbey, which it bought in 2004. |
| There will be some concern that the disappearance of A&L as an independent entity would leave too much power in the hands of the big banks Robert Peston, BBC Business Editor Read Robert's thoughtsSee Alliance sharesSee other bank shares | There will be some concern that the disappearance of A&L as an independent entity would leave too much power in the hands of the big banks Robert Peston, BBC Business Editor Read Robert's thoughtsSee Alliance sharesSee other bank shares |
| "The takeover â if successful â would be a great relief to the City watchdog, the Financial Services Authority â because it believes big banks are more robust in these uncertain times," he said. | "The takeover â if successful â would be a great relief to the City watchdog, the Financial Services Authority â because it believes big banks are more robust in these uncertain times," he said. |
| "However Alliance & Leicester has been a source of important competition in the UK's relatively concentrated banking market," he said. | "However Alliance & Leicester has been a source of important competition in the UK's relatively concentrated banking market," he said. |
| "So there will be some concern that the disappearance of A&L as an independent entity would leave too much power in the hands of the big banks." | "So there will be some concern that the disappearance of A&L as an independent entity would leave too much power in the hands of the big banks." |
| 'No certainty' | 'No certainty' |
| A&L said the approach being discussed was for 317 pence per share - but it warned that it could not be sure that a deal would be "forthcoming". | A&L said the approach being discussed was for 317 pence per share - but it warned that it could not be sure that a deal would be "forthcoming". |
| Like other British lenders, Alliance & Leicester has seen its share price slump due to the credit crunch. | Like other British lenders, Alliance & Leicester has seen its share price slump due to the credit crunch. |
| Alliance said it had disclosed details of the bid "without the consent" of the suitor. | Alliance said it had disclosed details of the bid "without the consent" of the suitor. |
| It added: "There can be no certainty that an offer will be forthcoming or as to its terms." | It added: "There can be no certainty that an offer will be forthcoming or as to its terms." |
| Unlike other leading UK banks and mortgage lenders, Alliance & Leicester has not had to tap its shareholders for additional cash to shore up its balance sheet. | Unlike other leading UK banks and mortgage lenders, Alliance & Leicester has not had to tap its shareholders for additional cash to shore up its balance sheet. |
| Alliance saw its annual profits fall 30% last year amid turbulence in credit markets, which has forced it to write down the value of mortgage-backed investments by nearly £400m. | Alliance saw its annual profits fall 30% last year amid turbulence in credit markets, which has forced it to write down the value of mortgage-backed investments by nearly £400m. |
| Like other lenders, Alliance has reacted to the credit turmoil by reducing the number of mortgages it sells and pushing up the interest rates. | Like other lenders, Alliance has reacted to the credit turmoil by reducing the number of mortgages it sells and pushing up the interest rates. |
| Following the news of the bid approach, Alliance's shares rose 93p, or 42%, to 312.25p. Shares in other lenders soared on the news, with Bradford and Bingley shares rising by more than 25%. | Following the news of the bid approach, Alliance's shares rose 93p, or 42%, to 312.25p. Shares in other lenders soared on the news, with Bradford and Bingley shares rising by more than 25%. |
| Are you affected by issues covered in this story? Are you an Alliance and Leicester customer, shareholder or staff member? Send us your comments using the form below. | Are you affected by issues covered in this story? Are you an Alliance and Leicester customer, shareholder or staff member? Send us your comments using the form below. |