Bank adopts new strategy on Abbey

The Bank of Scotland is preparing to launch a £27 billion ($89 billion) agreed merger offer for Abbey National without waiting for the outcome of the Office of Fair Trading inquiry into Lloyds TSB's £18.3 billion bid.

The offer could come within the next fortnight if the watchdog agrees to clear its plans for Abbey before the February 8 deadline.

The Scottish bank's shift in strategy follows signs that Lloyds is increasingly pessimistic about its chances of avoiding a competition referral.

Bankers say that chief executive Peter Burt, who until now has been reluctant to confront Lloyds over Abbey, has decided after talks with Abbey chief Ian Harley that there is little point in waiting until the February 23 deadline for the Office of Fair Trading ruling on Lloyds' bid.

One banker said: "What Mr Burt is about is a pro-competitive proposition. Lloyds-Abbey is clearly anti-competition."

Mr Harley agreed to a meeting within the next few days with Peter Ellwood, the Lloyds chief executive. The meeting follows the publication of the details of Lloyds offer for Abbey this week.

But, with little in the document which is genuinely new, the chances of it being accepted are slim.

Abbey has already rejected the offer once.

The offer is not a full bid since it is conditional both on getting official clearance and a recommendation from the Abbey board.

It does not start the normal 60-day bid timetable.

- INDEPENDENT