Bank of Scotland subsidiary Equity Bank has acquired Smurfit Finance for an estimated £35 million (€44.44 million). The merged operation will have about 7.5 per cent of the small and medium-sized business leasing and commercial mortgage market, adding about 2.5 per cent to Equity's existing share. Smurfit Finance has disclosed net assets of £14.1 million. Its total assets are estimated at about £200 million. At £35 million the price is just under 2.5 times net assets.

Equity chief executive, Mr Mark Duffy, said the Smurfit Finance business was incremental to Equity's business. There will be no redundancies as a result of the merger and the 40 Smurfit employees will be placed either at Equity's corporate business office in St Stephen's Green or at its telephone banking operation in Clonskeagh.

Smurfit Finance has a loan book of about £200 million and operates in commercial mortgages and motor leasing as well as captive leasing for the Smurfit group.

Mr Duffy describes the business as "conservatively run and well managed".

The combined operation will have total assets of about £1 billion, 200 staff and profits of about £10 million. Synergies from the merger and increasing business volumes are expected to boost profits to around £13 million this year.

The acquisition by Equity comes just after it was revealed that Bank of Scotland did not make a bid for the State-owned ICC Bank. Mr Duffy confirmed that Bank of Scotland looked at ICC. But he said it decided against the bid because the operation was not a suitable fit for Equity. "It makes more sense to spend our money on perfect bolt-on acquisitions which will bring an instant return," he said. ICC is a good business but it operates in a number of areas, some of which are not the focus of Equity's planned expansion and there would be overlaps between the two operations, he said.

Equity will continue to expand and has the full support of its parent, according to Mr Duffy. Bank of Scotland's move into the Irish mortgage market last week, selling direct to customers, will help Equity's expansion, he said. Equity aims to leverage off Bank of Scotland's client base by cross-selling motor and other products to these customers. The Bank of Scotland customer list will be used by the Equity tele-banking operation.

The sale of Smurfit Finance is the second recent disposal of a financial subsidiary by Smurfit following its sale of Smurfit Paribas to Irish Intercontinental earlier this year for an estimated £30 million.