Bank of Ireland confirms overtures to Abbey National

Bank of Ireland have confirmed a takeover of Abbey National is on the cards.

A statement made to the London stock exchange confirmed earlier weekend press reports that while no formal discussions had yet taken place, the Bank of Ireland had expressed an interest in a possible merger.

A merger would mean the creation of Europe's 12th largest banking organisation with a combined value put at around £15 billion to £18 billion. The Bank of Ireland proposals would see the Dublin-led company have its main listing on the London stock markets.

While the Abbey National in effect remains rudderless since the departure of Chief Executive Ian Harley who stepped down from his post in September, Abbey's shares showed a marked recovery on confirmation of the Bank of Ireland statement.

Mr Harley left just one month after a profits warning from the UK's second top mortgage lending institution group in August. The Abbey group had revised profits after a series of bad loans in the wholesale banking division had seen high-level executives leave the company. Speculation at that time was rife that Abbey's low share price made the group a prime target for a takeover bid.

Market analysts anticipate a hostile takeover bid and say that the Bank of Ireland is only one of an array of suitors. With Abbey's shares hitting a seven-year low last week, Abbey's continued weak market position makes a hostile takeover bid all the more likely.

(SP)