Financial journalists owe a debt of gratitude to Emilio Botin. Nothing beats a protracted bid saga for seeing the City pages through the summer holiday season. There had been high hopes that a sustained tussle between Marks & Spencer and Philip Green might have provided news and speculation to fill columns until the autumn, but Green had the good sense to pack up his virtual bid and sail off on his yacht instead.
So the arrival of the chairman of Banco Santander Central Hispano with his bid for Abbey National has been welcomed in the financial pages. It was also well received at Abbey National HQ - a bit of a let-down for those who relished a full-blooded bid battle. But even though the Abbey board was in the mood to capitulate, the financial pages may yet have their wish, for the likelihood of a rival offer is mounting.
Whether or not BSCH carries off the prize, its offer of roughly £8 billion has fuelled debate on whether the time is right for the oft-mooted consolidation of European retail financial services. Could a wave of cross-border mergers be starting? Investment bankers will certainly try to engineer it: they're still looking for the explosion of M&A activity that would characterise the end of the recession.
Yet, as the CEOs of several British banks contend, strong arguments remain for national consolidation before cross-border transactions take off. Some of the best competition lawyers in Britain are wondering how they can persuade the competition authorities to share that view.
Peter Ellwood, former CEO of Lloyds TSB, who now chairs ICI, spent much of his time searching the Continent for a deal to take the bank into a new league. He failed to find one but, with his attention fixed across the Channel, Lloyds TSB lost ground in its home territory. His successor, US banker Eric Daniels, is concentrating on the bank's British business and would love to bolster it with the acquisition of Abbey - at around half the price Lloyds would have paid had the Competition Commission not vetoed its earlier bid. James Crosby, CEO of HBoS, has ambitions to acquire Abbey now and reckons he has a better chance than Daniels and his other British rivals.
If the competition authorities allow a domestic takeover of Abbey, the price would probably exceed anything the Spaniards would pay, for there would be much greater cost savings to be extracted. That was demonstrated in the takeover of National Westminster by Royal Bank of Scotland. RBS chief Sir Fred Goodwin has so successfully squeezed out costs from NatWest and maximised the economies of scale that the benefits of the deal have exceeded anything he thought might be achieved.
He is making a concerted effort to effect similar magic in America, with a series of acquisitions. But Europe has less attraction for Fred the Shred: at the retail level, European markets for banking are disparate and customers favour familiar brands.
The picture is different in investment banking. Most of the City of London's finest were long ago submerged into the megabanks that now straddle the globe. The mighty Warburg became part of Swiss Bank Corporation, which then joined with United Bank of Switzerland and did away with the Warburg name altogether. Morgan Grenfell vanished into Deutsche Bank and Kleinwort Benson into Dresdner. Corporate clients seeking to play on a global stage wanted investment banks with a similar reach. Further consolidation among the investment banks will come.
At the retail level, however, the demand is different, and so are the providers. Germany has its publicly owned Landesbanks, some in poor shape; Spain has its co-operative caixas, still important players in their respective regions. And despite the EU's efforts, there's no single market in financial products. So taking a larger slug of the home market offers the most attractive route to expansion for those banks that can pursue it.
The wily have been positioning themselves for when European champions start to emerge in retail banking. In particular, Royal Bank of Scotland has a 1% stake in Banco Santander, and its chairman, Sir George Mathewson, has a seat on the BSCH board. BSCH has 5% of RBS, and Botin is a director, along with his general manager. Such close relationships, one imagines, could not be sustained if the Spanish bank were to be successful in buying Abbey, an RBS rival.
But Continental banks have different attitudes. Although the Botin family has just 3% of the bank, now rated the world's 10th-largest retail bank by market value, it remains something of a family institution. When Emilio's brother resigned as a director recently, the chairman slipped his son into the vacant seat. Just imagine what the British corporate governance police would say if Mathewson tried that at RBS.
While Continental retail banks maintain such different approaches, that wave of cross-border mergers may remain some way off.