Pensions a hot topic in Abbey bid

TRUSTEES of Abbey's staff pension funds will scrutinise details of Banco Santander's £8bn-plus bid today.

They have requested clarification from Santander of how it proposes to safeguard employees' retirement rights.

The issue has become a hot potato in takeover bids. Two recent deals - Philip Green's highly-leveraged assault on Marks & Spencer and Permira's attempted takeover of WH Smith - have been scuppered by concerns over the safety of staff pensions.

Abbey's main final salary pension schemes have 51,000 members and were closed to new entrants in 2002.

The funds have a £632m deficit. Santander boss Don Emilio Botin has pledged to earmark enough capital to fill the entire hole.

The trustees, chaired by Abbey non-executive Lord (Charles) Shuttleworth, have an absolute duty to safeguard members' rights and will want to ensure Santander's assurances are copperbottomed.

Their meeting was already scheduled but has taken on new urgency in light of the bid.

A spokesman for Santander said: 'Employees of Abbey should be entirely reassured. This is a financially strong global bank.'

Its 'A+/A-1' ratings were confirmed by credit agency Standard & Poor's.

Santander bosses toured the Square Mile yesterday in a bid to convince big investors to back their £8bn-plus agreed bid.

Big shareholders are lukewarm about the offer. 'It is not a knockout,' said one. The 10p rise in Abbey shares to 567p hints at traders' belief that a rival bidder is lurking.

The UK big five - Royal Bank of Scotland, HSBC, Barclays, Lloyds TSB and HBOS - are all monitoring the situation keenly but are wary of falling foul of the competition regulator. Citigroup of the US is another potential predator.

Abbey has agreed to pay a break fee of £81.7m to Santander if it opts to accept a rival offer.