Alliance & Leicester (A&L) bank shareholders will meet later to vote on the proposed £1.3bn takeover by Spain’s Banco Santander.

The vote will take place as the shockwaves from the collapse of of the 158-year-old Wall Street giant Lehman Brothers reverberate worldwide.

Last month A&L sent a letter out to more than 560,000 shareholders urging them to support the deal.

A&L considers that its prospects as an independent entity are not good.

Merger plan

The bank’s shareholders will convene at Birmingham’s International Convention Centre later.

They are being offered one Santander share for three A&L shares as part of the planned takeover offer which was announced in mid-July.

If the deal takes place as planned this October, then A&L will be merged with Banco Santander’s existing UK subsidiary, Abbey.

This will create a much larger bank with 959 branches and 10% of the UK’s bank current accounts.

With the credit crisis wiping out most of A&L’s half-year profits and the continued high cost of securing funding in the wholesale markets, the bank’s board is keen to insulate itself against a worsening economic backdrop.

Its shares ended 6% lower on Monday after a series of dramatic developments on Wall Street hit confidence in the UK banking sector.

News reported by The BBC