The prospect of a battle for British bank Abbey National spurred its shares on Monday after rival HBOS said it was considering challenging Spain's Santander Central Hispano's offer for the mortgage lender.
Abbey stock was up 2.12 percent at 579 pence by 1113 GMT, around a 5 percent premium to the agreed offer from Spain's largest bank, currently worth about 8.1 billion pounds ($14.8 billion), as investors bet HBOS's comments could flush out rival offers.
Britain's fourth-largest bank, Edinburgh-based HBOS, said on Sunday it was looking at the possibility of a counter-bid but cautioned that no decision had yet been taken.
Its shares were 2.39 percent lower at 695 pence in a general market down 0.24 percent.
A take-over by HBOS would bring together Britain's two biggest mortgage lenders, creating a company valued at about 36 billion pounds, but any bid would almost certainly face regulatory hurdles and would be likely to trigger counter offers.
"Other UK banks would be attracted by the scope to make a lot of money out of it. The terms as they stand, with the scope for efficiency savings and so on, you could make a pretty convincing case," said one of Abbey's top 10 shareholders.
Jim Wood-Smith, head of equity strategy at Barclays Private Clients, said he did not think regulators would let HBOS bid.
Many analysts and investors had assumed that ruling made a UK move on Abbey unworkable.