Spanish banking giant Santander has announced its UK customers will not be charged to use cash machines in Spain from next week.

The group said its Abbey and Bradford & Bingley current account holders would be able to use the ATMs free of charge from January 11.

The move means customers withdrawing money in Spain will no longer have to pay a cash handling fee of 1.5% of the transaction and a foreign exchange fee of 2.75%.

The introduction of free ATM withdrawals in Spain is being brought in to coincide with the start of the group´s programme to rebrand its Abbey and Bradford & Bingley businesses. The deal will be extended to include Alliance & Leicester current account holders from the third quarter of the year, when it is also rebranded Santander.

In order to qualify for the free withdrawals, customers must pay at least £1,000 a month into their current account.

Around 22% of all withdrawals made from an Abbey bank account using an ATM overseas during the past year were made in Spain.

Alison Brittain, executive director of UK retail distribution at Santander UK, said: “Providing free access to Santander ATMs in Spain could save our customers over £2 million a year in ATM charges.”

Santander has made no secret of the fact that it wants to grow its share of the UK current account market.

In November it launched a fee-free Zero Current Account, which is only available to mortgage customers who hold their current account with it. The group, which has a 13.5% share of the mortgage market, said it was keen to convert its two million Abbey mortgage customers into current account holders in order to take on the big four clearing banks in this area.

Santander has 25 million customers in the UK, and it also aims to increase the number of products each person holds through offering competitive deals to its existing customer base.

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