Irish financial stocks remained buoyant yesterday, as Lloyds TSB's £18.5 billion sterling (€30.5 billion) bid for Abbey National was blocked as speculation mounted that it could trigger a bid for an Irish bank.
The decision by British Trade Secretary, Ms Patricia Hewitt, which was based on concerns that it would impede competition, has now effectively ended any further take-overs by the four UK banks. This will force them to look overseas for acquisitions.
AIB and Bank of Ireland shares have benefited from this development with some UK analysts suggesting a take-over of one of these banks could be a good half-way house to cross border deals for the British banks.
Analysts in the Republic will not rule out such development in the short term but feel there will be more consolidation within the Irish banking sector before a major takeover.
Bank of Ireland would be attractive to Lloyds TSB as it already has substantial operations in the UK through its Bristol & West subsidiary. AIB offers the British banks a bridge into the US market through its Baltimore-based subsidiary, Allfirst.
