Britain's second biggest mortgage lender Abbey National has agreed to a bid from Spanish bank Santander Central Hispano.
Abbey said this morning it had agreed to a cash and shares offer from Spain's largest bank but did not give any further details. A full announcement is expected later today.
The deal will create the world's eighth largest banking group.
Banco Santander Central Hispano (SCH) emerged five years ago from the merger of the Santander and Central Hispanoamericano banks to create the country's largest banking group and one of Europe's biggest, with the group comprising 103,000 employees in 2003, a third of whom are in Spain.
The company has an estimated 22 million customers in 30 countries and about 9,000 branches.
British home-loan specialist Abbey National is struggling to return to profitability after two years of heavy losses, which were fuelled by soaring bad debt at the company's wholesale banking unit.
In April, Abbey said it was on track to post annual pre-tax profits this year, after its core personal finance services business returned to the black in the first quarter.
Abbey's share price jumped 87p to 580p on Friday after Santander confirmed its interest.
