British bank Lloyds TSB yesterday moved a step closer to mounting a hostile bid for UK rival Abbey National, seeking clearance from regulators for its proposed takeover.

There is speculation in the UK financial markets that Lloyds could launch a hostile bid for Abbey, the UK's fifth biggest bank, within days.

Abbey has already rejected an indicative cash and shares bid worth about 18.2 billion from Lloyds TSB. Abbey has been negotiating a nil-premium merger with the Scottish bank.