|
|
  |
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
Abbey National rejects approach
LONDON, England (CNN) -- Abbey National, Britain's sixth-biggest bank, has rejected a merger approach by Bank of Ireland and said it would go on cutting costs to revive profits. "The board unanimously concluded that the most effective means of restoring value to Abbey National shareholders at this time will be to achieve the operating and structural changes targeted in the interim statement on July 26,'' the Abbey National said on Tuesday. "The board of Abbey National has therefore determined that the Bank of Ireland's approach is not in the best interests of shareholders,'' it said. Bank of Ireland said on Sunday it made an informal approach to merge with Abbey National.
Abbey National, which has a market value of about 7 billion pounds ($11 billion), has been the centre of takeover speculation as bad loans and bond losses led to a slump in profits and the departure of chief executive, Ian Harley. Lloyds TSB made a hostile bid to buy Britain's second-largest mortgage lender, but that was blocked by the British government more than a year ago. The National Australia Bank, the largest bank in Australia, made a similar approach but Abbey, which began selling mortgages in 1849, rejected that approach. A deal to combine Abbey and the Bank of Ireland -- one of Ireland's top two banks -- would create a group with a market value of about $22 billion. The Irish bank has a current market value of about 11 billion euros ($11 billion). But analysts cast doubt that a merger is on the cards. "We view this as an opportunistic move by Bank of Ireland reflecting the relative value of their stock over Abbey National's," analyst at Merrill Lynch wrote in a note to investors on Monday. "As such, we would not be surprised if Abbey National resisted BoI's proposals in the belief that the proposals undervalue the potential within the Abbey National franchise." "However, given the scale of the problems within Abbey National ... in our view management do not have much of a track record to defend," the investment bank said. While Lloyds' bid fell apart because of competition concerns, analysts believe the Irish banks proposal could escape regulator concerns. But the Bank of Ireland's last attempt to buy a British bank -- Alliance & Leicester -- fell apart because the two could not agree who would lead the combined group. Analysts believe Abbey would sit well with the Bank of Ireland's own UK retail bank, Bristol & West. The Bank of Ireland is keen to grab a bigger slice of the UK mortgage market as more and more Britons rush to buy property with interest rates currently at 38-year lows. The Irish economy is also expected to grow at its slowest pace in a decade, which could rein in profit growth. Abbey National's shares rose 2.3 percent, or 12.5 pence, to 543 pence in early trading on Tuesday. Its stock sank to a seven-year low on Friday and rose about 6 percent on Monday after the Bank of Ireland said it had made an informal approach.
|
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||
