SHARES in Abbey, the UK’s sixth biggest bank, surged nearly 5 per cent yesterday on speculation that Banco Santander Central Hispano (BSCH) is considering a bid.

BSCH, Spain’s biggest bank, is thought to have contacted Abbey more than a month ago about a possible deal. However, Abbey’s management, led by Lord Burns, chairman, and Luqman Arnold, chief executive, are believed to have been unreceptive to the approach.

The bank is in the middle of a three-year revival plan that involves winding down a portfolio of loss-making high-risk investments to concentrate on rejuvenating Abbey’s retail brand.

Shares in Abbey, formerly Abbey National, surged by 16¼p to 448¼p. The bank was the biggest riser in the FTSE 100 index.

City analysts felt it was highly unlikely that BSCH would bid for Abbey as it has only just moved into profit after two years of losses totalling nearly £1.6 billion.

One analyst pointed out that BSCH was rumoured to be interested in buying Italy’s Sanpaolo-IMI last year. The Spanish bank bought a stake in the Italian bank, then sold it after bid speculation pushed up the Italian bank’s share price.

City sources also pointed out that at the end of last month a Madrid judge ordered that Emilio Botin, chairman of BSCH, be tried for granting large payoffs to two former directors of the bank. Although he denies all wrongdoing, the trial could hamper any plans to launch a takeover of a rival bank.

Another analyst said that continuing uncertainty about the true value of Abbey made it more likely that an opportunistic bidder might strike but pointed out that any acquirer would seek the acquiescence of the management.

Abbey’s shares have shown considerable volatility under the present management. Shares dropped 12 per cent on the day it announced its full- year results and dropped another 4 per cent after the first-quarter figures came in below market forecasts.