Abbey gets the worrying habit

FEARS are growing within Abbey National that a drawn-out competition inquiry could have a damaging effect on the High Street lender.

Insiders liken its predicament to that of Safeway last year when profits and staff morale took a dive after it was caught up in a competition probe. But they say it is much harder for a bank to win back former customers than it is for a supermarket.

While Abbey is publicly still backing the recommended £8.8bn bid from Banco Santander, its advisers are analysing market shares to work out the probability of a counterbid from HBOS or others being blocked.

A referral to the Competition Commission could string out the uncertainty, leaving a weakened bank with perhaps no buyer at the end.

Abbey is also worried about its ability to attract new recruits. One thousand staff - 4% of its workforce - leave every year.

The company denied that staff incentives to sell more current accounts and personal loans in branches were linked to keeping the business on an even keel while predators circle. Staff are said to have been offered a £5 bonus if they can persuade customers to open two accounts.

This Friday is the last date for Santander to make undertakings to Brussels before the European Commission waves the takeover through on 17 September.

Santander and RBS are thought to have agreed that the two directors who sit on each other's board will stand down.