Will Abbey tempt other investors?

Is the offer from Spanish lender Santander Central Hispano (SCH) now a done deal?

Most probably.

Shareholders still have to approve the Spanish bank's �8.5bn ($15.6bn) offer.

But the most likely rival contender was thought to be HBOS, owner of the Halifax and Bank of Scotland, and HBOS has now said it is not interested in bidding.

There is still a chance that other financial institutions may now come forward with their own bids, but they have been playing down their interest.

Among the names that have been bandied about are UK-based Lloyds TSB and US giant Citigroup, the world's biggest bank.

What exactly is SCH offering?

Santander Central Hispano is offering one SCH share, plus 31 pence in cash, for every Abbey share.

Compared to Abbey's share price on demutualisation back in 1989 - 130p - this represents an increase of 429p or 430%.

While the cash may be welcome, many of Abbey's 1.8 million private shareholders may be a little perplexed about the prospect of owning shares in a Spanish bank.

After all, what should they, or can they, do with them?

BSCH boss Emilio Botin has been building a banking empire

In response, the bank revealed measures on Wednesday aimed at reassuring Abbey shareholders.

SCH said that following the merger, Abbey shareholders would be able to get their dividend payments in sterling, rather than euros, and will receive the money every three months.

The lender also will seek a secondary listing in London, so that the value of its shares will also be quoted in sterling.

Can you tell me more about SCH?

It is Spain's biggest bank and, according to analysts, it is very efficiently run by chairman Emilio Botin.

Under Mr Botin's strong-willed stewardship the lender has grown steadily in recent years, transforming itself from a small operation into an international institution.

In 1999, it bought Banco Central Hispano to become Spain's largest bank.

Currently valued at around �30bn, it has a strong presence in Europe and Latin America, and employs more than 100,000 people.

Why was Abbey National so susceptible to a takeover approach?

Mainly because of its terrible financial performance over the past two years, caused in large part by a disastrous attempt to move into corporate banking.

The company has been struggling

The ambitious plan to branch out from its traditional background of mortgage lending and savings accounts started in 2001, very quickly becoming an expensive failure and denting the group's overall earnings.

As a result, Abbey announced two straight years of major losses - �984m ($1.6bn) in 2002 and �686m ($1.3bn) in 2003 - and the attempt to turn itself into a major corporate player was abruptly abandoned.

Abbey has been trying to recover ever since.

So is SCH buying a bank in crisis?

No, it isn't.

Despite Abbey's recent losses, the main structure of the bank remains very solid, with 16 million customers and total assets of �177bn at the end of 2003.

It may be that SCH now smells a potential bargain.

The Spanish bank's offer - worth �8.5bn - is less than half the �18bn tabled by Lloyds TSB in 2001 in an attempted takeover that was eventually blocked on competition grounds.

What's in it for SCH?

SCH reckons that it can wring 150m euros of cost savings in the first year after the merger, rising to 300m euros in the second and 450m euros in the third.

The main source of these savings will come from an improved management and computer system at Abbey.

SCH did warn, however, that "there will inevitably be some headcount reduction".

It reckons that about 3,000 jobs will have to go at Abbey at a cost of 90m euros.