Bank of Ireland's shares have recovered some ground ironically with the help of a rumour that the British Lloyds TSB bank was now eyeing up the Republic's second biggest bank.
Its shares gained 37 cents to end at €9.05 as investors returned to buy the stock after its 15 per cent fall this week.
It had been trading at over €10 before the takeover bid was announced. Analysts suggested that the markets have now effectively written-off any prospect of a deal between Bank of Ireland and Abbey National.
One analyst described yesterday's bounce in the share price as a "relief rally" on the basis that the Abbey National deal will not happen. There was some speculation that Lloyds TSB was considering launching a bid for Bank of Ireland at a time when its share price was very weak.
Lloyds TSB, which was a previous bidder for Abbey National, has long been seen as a potential suitor for Bank of Ireland although many analysts have dismissed this speculation as a market rumour.
Bank of Ireland is preparing to make public the detailed bid it submitted to Abbey National's chairman, Lord Burns, last month. This information is expected to be issued to the Dublin and London stock exchanges in the coming days.
The bank is expected to indicate that it did offer Abbey shareholders a premium and to emphasise the cost savings and revenue synergies that would result from a link-up between the two banks. Bank of Ireland's offer was made on September 19th when Abbey National's share price was trading at £6.10 with analysts suggesting it could have made an indicative bid of between £6.50 and £7.
Bank of Ireland is hoping that this move will put pressure on Abbey National to engage in meaningful talks about the bid although the stock markets do not expect it will be successful.
Abbey National's shares slipped back in London yesterday having rallied strongly on the news of a bid. The shares shed 5p to end at £5.88 as the prospects of an imminent takeover receded. The former building society has made it clear that it favours remaining independent and implementing its recovery plan to boost its fortunes. Yesterday it announced that it had struck a distribution agreement with the Prudential.
The tie-up, which should come into force next year, will see Prudential's with-profits Prudence savings bond sold through Abbey National branches.
As part of the tie-up, Prudential will also replace its current protection products with new ones developed for it by Abbey National, including life assurance, critical illness cover and income protection.
The agreement is dependent on the implementation of proposals allowing banks and insurers to sell products from a range of providers.
The products will be underwritten and administered by a new dedicated business unit within Scottish Provident, Abbey's specialist protection arm, and sold under the Prudential brand.
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