|
UK, Irish banks in talks
|
 |
May 24, 1999: 4:08 a.m. ET
Bank of Ireland and Alliance & Leicester seek $8.2B cross-border merger
|
LONDON (CNNfn) - Bank of Ireland and the U.K.'s Alliance & Leicester announced a groundbreaking merger plan Monday to create Ireland's largest bank and the eighth-largest in Britain.
A merger would create a bank with a market capitalization of around 11.4 billion pounds ($18.4 billion) and is the first between European Union-based banks inside and outside the 11-nation euro-zone.
Bank of Ireland shareholders would control 55 percent of the combined group.
The deal was broadly welcomed by banking analysts as improving the competitive position of both banks and expanding the range of products they can offer. "It improves the (combined) group's margins in the United Kingdom and gives Alliance & Leicester a fuller product palette, which has been one of its potential weaknesses," Matthew Czepliewicz at Salomon Smith Barney told CNN.
The banks said the deal would create annual pretax cost and revenue benefits of more than 200 million pounds.
Bank of Ireland had signaled its intent to expand beyond its domestic market and had been linked with Britain's Bradford & Bingley building society. Analysts said the key to the Bank of Ireland deal was to diversify the banks' businesses.
Both institutions are strong in their respective mortgage markets and the Irish bank owns Bristol & West, a small U.K. thrift. However, Alliance & Leicester has diversified into corporate banking, treasury and insurance services.
The Irish bank, capitalized at 6.3 billion pounds compared with 5.1 billion for Alliance, will have added clout to expand in the euro-zone and would be able to ward off potential predators looking to buy into the booming Irish economy where growth is running at almost 7 percent. "It provides [them] with a degree of protection," said Czepliewicz.
Alliance & Leicester, which converted to a bank from a mutually-owned mortgage institution in 1997, is protected by regulators from hostile takeover bids until 2002 but is free to negotiate agreed deals.
Alliance & Leicester (AL) shares opened 9 percent higher in London Monday at 947 pence.
-- from staff and wire reports
|
|
|
|
|
 |
|
