EBS IS in negotiations with Dutch banking giant Rabobank about a potential takeover of the building society, The Irish Times has learned, writes SIMON CARSWELL, Finance Correspondent.
Separately, Irish Life & Permanent (IL&P) confirmed yesterday in a statement to the stock exchange that it has also been in discussions with the building society "about how the two institutions might work together in the current environment".
IL&P issued the statement in response to recent comment in the media about talks between the two guaranteed institutions and a potential tie-up between them.
Shares in IL&P closed down 4.3 per cent at €1.10, valuing the company at €304 million.
EBS declined to comment.
A spokeswoman for Rabobank's Irish subsidiary, ACCBank, said it had "no comment to make in relation to rumours or speculation regarding Rabobank and EBS".
If a deal was agreed between the Irish mutual and the Dutch co-operative, Europe's only AAA-rated bank, the society's estimated 250,000 members could receive member shares in Rabobank, which would pay a coupon (or dividend) a year and a lump-sum payment after about five years.
The building society's discussions with both IL&P and Rabobank come as a major consolidation of the Irish banks has emerged in meetings between Minister for Finance Brian Lenihan and the heads of the guaranteed institutions on Thursday as a possible means of strengthening the sector.
Mr Lenihan raised "structural consultations" with the chairmen and chief executives of the banks and asked them to reflect on the discussions and meet again next week.
Talks between IL&P and EBS are understood to have started about two months ago, around the time the Government's bank guarantee scheme was announced. An alliance between them would join IL&P, the State's largest mortgage lender, with the sixth-biggest player. IL&P controls 20 per cent of the mortgage market, while EBS has about 10 per cent.
Talks on a potential tie-up of the bank and building society are understood to be at an advanced stage, though a marriage between the institutions would require the blessing of Mr Lenihan, who has the power to sanction mergers between institutions under the terms of the State bank guarantee.
EBS is believed to have been approaching potential suitors and assessing possible mergers in recent months in an effort to raise fresh capital. EBS chief executive Fergus Murphy told RTÉ on Monday that the building society was considering a number of options, including a possible sale, as it expected to post a loss this year due to higher bad debt provisions on the society's €2.4 billion commercial property loans.
