Spanish bank 'held A&L bid talks'

Alliance & Leicester could be bid target

UK bank Alliance & Leicester held talks last month about a possible takeover by Spanish bank Santander, reports say.

The Financial Times said that although the talks in December faltered over the price, Santander has not ruled out resuming negotiations with the UK bank.

Reports said Santander's offer valued A&L at more than £2.7bn ($5.36bn).

Shares in A&L jumped by more than 8% on the news. The shares had fallen 43% in the past year on fears the bank could be hit by the credit crunch.

However, A&L has denied it faces any problems, and in November it issued a trading statement saying that it had secured extra funding facilities which would enable it to remain pre-funded until the third quarter of 2008.

Santander has been seeking to expand its presence in the UK market. The bank already owns Abbey, the UK's third-largest mortgage lender, which it bought in 2004.

A&L shares were up 8.41%, or 54.5 pence, at 702.5p in early morning trade.