Santander Central Hispano has restated its commitment to an £8.3 billion takeover of Abbey National despite mounting expectations of a counterbid from HBOS.

Although an HBOS offer would trigger an investigation by trade watchdogs which could take months to complete, SCH said that it was willing to sit out a probe.

"The referral of any competing offer which may be announced for Abbey to the Competition Commission does not, in itself, provide grounds for the Santander offer to lapse," the bank said.

However, Santander, Spain's biggest bank, highlighted small print in an offer statement last month placing a March 31 2005 deadline on its offer.

"Abbey and Santander still expect that the acquisition will be completed before the end of 2004," today's statement added.

The comments come amid reports that HBOS is to meet Abbey's largest shareholder, Brandes, the fund, as part of a tour of US investors. Brandes also owns shares in HBOS, the UK's fifth largest bank.

HBOS is also believed to have been granted access to commercially sensitive Abbey data.

The reports, and a letter HBOS wrote yesterday to the European Commission complaining at the implications of cross-shareholding between Santander and Royal Bank of Scotland should an Abbey bid succeed, have raised expectations of a counterbid.

However, with HBOS and Abbey the UK's top two ranking mortgage lenders last year, with a market share of about 30 per cent, any merger attempt is thought certain to attract a Competition Commission inquiry.

A commission investigation three years ago led the Government to block Lloyds TSB's attempts to buy Abbey for £18 billion on grounds of the share the merged bank would have of the current account and small business banking markets.

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