EU okays Santander's buy of Alliance & Leicester

BRUSSELS (Reuters) - The European Commission approved Spanish bank Santander's (SAN.MC) 1.3 billion pound takeover of mortgage lender Alliance & Leicester ALLL.L on Tuesday, saying the deal would not harm competition in the sector.

Santander, Europe's second-largest bank, already owns UK bank Abbey and the deal would combine the sixth- and eighth-largest banks in Britain with overlaps in payment cards, financial services and insurance, the Commission said.

"However, in all these activities the combined entity would have market shares below 15 percent and would face strong competition from several UK banks such as Barclays, HBOS, Lloyds, Nationwide and RBS/NatWest," the European Union executive said in a statement.

(Reporting by Huw Jones; Editing by Dale Hudson)