Shares in former British building society Alliance & Leicester have firmed yesterday as the sudden departure of the chief executive, Mr Peter White, reignited merger talk.
Analysts said speculation about a deal with fellow mortgage player Woolwich or leading bank Lloyds TSB was unlikely to get too heated because A&L has two years of demutualisation bid protection left to run.
But the news fuelled hopes for a speedy consolidation in a market frenzied by Bank of Scotland's £22 billion sterling (€27 billion) hostile bid for National Westmister Bank.
A&L shares surged 4 per cent after it confirmed to the London Stock Exchange in its late-Friday statement that Mr White had left immediately after a dispute with the board.
It later eased to close yesterday at 898p, still 10p up on the day.
A&L said Mr White's departure after seven years as chief executive was due to "a divergence of views with the board over the management of the group".
Non-executive chairman Mr John Windeler has taken on Mr White's role until a new chief executive is found. "The board's view was that a new more consensual style of leadership is needed," Mr Windeler said in a statement, adding no fundamental change of direction was planned.
Mr White was seen as instrumental in A&L's focus on cost reduction and the bank was seen to have lagged others in investing in Internet-specific products.
Mr White was also seen responsible for the failure in June of merger talks with Bank of Ireland, after he insisted on being chief executive of the enlarged group.
A&L shares have lagged the banking sector by 12 per cent since the beginning of the year, but most analyst have a "buy" recommendation on the stock. A&L is trading at 14.9 times prospective earnings, which is in line with most other quoted mortgage players.
Under rules which allow building societies to demutualise and list publicly, A&L has five years protection against hostile bids. The protection expires in 2002, but would lapse on a merger or a takeover, agreed by 75 per cent of its shareholders.)
