Santander injects £1bn into Abbey

Banco Santander has injected £1 billion of capital into Abbey National in line with the government's plan for the banking sector.

The Spanish bank, which has also stepped in to acquire Alliance & Leicester and recently the savings arm of Bradford & Bingley, said the capital ratio would improve to around 9.25 per cent.

The move is a response to the government's requirement that all UK banks improve their Tier 1 capital ratio – a measure of a bank's strength – to improve confidence in the system.

Santander said it would not use the government's recapitalisation fund but "strongly supports efforts to stabilise the operation of financial markets".

The bank added the cash is in line with the commitment made at the time of the acquisition of Alliance & Leicester.

Last week, the bank recently provided £1 billion of loans of between three and six months to help ease the liquidity freeze.

Madrid-based Santander also confirmed it is holding "conversations" regarding the acquisition of US-based Sovereign Bank.