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Abbey pushes to finalise merger with BoS

Abbey National is pushing to finalise its merger with Bank of Scotland amid signs that Lloyds TSB is preparing to launch a bid for the former building society, according to national newspapers.

Abbey has offered between £21bn and £25bn for BoS and has agreed to locate the enlarged group’s head office in Edinburgh.

Also, the major stumbling block of the merger talks, over which chief executive should manage the merged group may have been resolved.

Abbey National chief executive Ian Harley would become the new group’s chief executive and BoS chief executive Peter Burt its chairman.

But, the agreement is by no means definite and the two sides have given themselves a further 10 days to finalise a deal.

Abbey claims the merger would create the UK’s second largest mortgage lender and seventh largest bank.

However, city analysts argue a Lloyds TSB and Abbey merger would be more valuable as it would have 25 per cent of the mortgage market and 30 per cent of the current account market.

Lloyds TSB chief executive Peter Ellwood called a board meeting on Sunday night to discuss the possibility of giving chairman Sir Brian Pitman clearance to mount a £20bn bid for Abbey.

However, it is unlikely a bid will be made until a firm agreement between Abbey and BoS has been put on the table.

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