By Jon Hitchin of Hargreave Hale & Co ANY doubts that the banking sector was becoming more competitive were dashed this week.

Abbey National, Britain's second largest mortgage lender, announced that it had agreed to buy Scottish Provident for £1.8 billion.

Abbey National has seen its profits from mortgages drop as competition has increased dramatically in recent months, hence this decision to increase its life insurance operations by around a third.

The company aims to reap 65pc of its profits from non-banking activities by 2003.

Scottish Provident put itself up for sale because of a lack of funds to expand and Abbey National beat bids from at least four other companies.

The bank is to fund the acquisition by issuing around £1.5 billion in debt and said the purchase will help it cut costs by around £55 million a year.

Brokers, SG Securities were positive on the deal, saying the bank could have paid a lot more for the insurer.

Coats Viyella announced poor results this week with pre-tax profits dropping from £52 million to £35.6 million for the six months to the end of June, with sales declining by 8pc.

Rather more importantly, however, the company announced two thousand job cuts in the UK, with a further three thousand at risk -- all in the West Midlands.

The company's clothing division is almost entirely reliant upon Marks & Spencer, who have been forcing costs down due to their own poor performance of late.

There have been calls for the Government to assist, though help has so far not been forthcoming.

After a very quiet summer on the technology front, with prices hardly moving at times, activity resumed once again last week with sharp increases in almost all of the technology shares.

There seems to be very little logic as to why this happened, but then again there rarely is where technology shares are concerned!

However, there has been a large amount of profit-taking in the second half of the week and the market has fallen back again to some extent.

Poor results from Sema Group on Tuesday did not help matters.

Old economy stocks suffered from the switch, though oil stocks have continued to rise with oil rising above $35 a barrel for the first time since 1990.