Santander Central Hispano is to sell half its shares in Royal Bank of Scotland which have become a focus of attempts to block a takeover of Abbey National.

Spain's largest bank said it would sell 79 million RBS shares, equivalent to a 2.51 per cent stake, with cross-directorships suspended until the Abbey issue was resolved.

"The cross-directorships would be terminated if the acquisition of Abbey becomes effective," Santander, which has two seats on the RBS board, added.

The moves follow complaints by HBOS, which is considering a counterbid for Abbey, over Santander's interests in two rival UK banks. HBOS last month urged the European Commission to force Santander and RBS to unwind their cross-shareholdings and directorships or block the Spanish bank's £8.6 billion Abbey bid.

EU competition regulators will by Friday next week decide whether to extend their investigation into the Santander-Abbey tie-up or to approve the deal.

HBOS welcomed today's moves, saying they brought "greater clarity to the relationships between Royal Bank and Santander".

Santander said it would use the £1.1 billion raised from the share sale for "general corporate purposes", with Emilio Botin, the bank's chairman, stating that it would "enhance [the company's] capital flexibility".

He added that while the RBS-Santander alliance, dating back 15 years, had always involved cross-directorships, both banks had recognised such representation would be "inappropriate" should the Abbey bid succeed.

Santander will retain a 2.54 per cent holding in RBS after the today's move, with a 90-day moratorium on a further reduction of the stake.

RBS holds 2.9 per cent of Santander and has boardroom representation through Sir George Mathewson, its chairman.

Royal Bank shares stood 41p lower at 1556p in afternoon trade.

In Madrid, Santander stock eased €0.06 to €8.18.

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