SPECULATION: Royal Bank of Scotland (RBOS) group chief executive Mr Fred Goodwin has moved to distance the bank from speculation that it is a potential bidder for AIB. Mr Goodwin said the rumours, which have supported the AIB share price in recent days, were not emanating from the Scottish bank.
"We are very fortunate to have Ulster Bank in Ireland. We are very happy with that business and we don't feel the need to do anything in Ireland," he said.
However, he added that the bank would continue to assess "tactical" acquisition opportunities in the Britain, the Republic, Europe and the US.
"We don't need to buy anyone for strategic reasons. We can benefit from scale from where we are today. We don't need to buy anyone to enable our businesses to flourish," he said yesterday.
Mr Goodwin said there were few acquisition opportunities for the bank in the British market, while RBOS was also unlikely to consider buying a large European bank. Its primary focus in terms of acquisitions remained in the US.
It currently operates Citizens, which is the biggest bank in New England and has recently added the Mellon financial corporation to that business.
"When we digest Mellon, we would like to buy more banks in the US to continue Citizen's success in buying acquisitions and making them work," he said.
Mr Goodwin refused to comment on whether AIB's Allfirst subsidiary would be of interest to the bank if it came on the market. This has been one of the factors fuelling the bid speculation, as market analysts suggest that RBOS would be able to realise great synergies from a deal with AIB.
In London, analysts suggest that, even if it was interested, there is no need for RBOS to make an early takeover bid for the Republic's biggest bank, which has been weakened by the Allfirst fraud. Some even suggest that the rumours may have generated in Dublin to help AIB's share price and to ward off other potential bidders.
Meanwhile Davy Stockbrokers has warned that any bid by RBOS for AIB would run into severe competition problems with the Irish regulators, and it would also require RBOS to raise a large amount of money in a share issue to meet the likely demands from AIB's Irish institutional shareholders for cash rather than RBOS shares.
On the competition side, the Davy analysts say that RBOS might have to sell Ulster Bank if it does acquire AIB and that the combined AIB/Ulster Bank would account for half the SME banking market. In Northern Ireland, where both banks have an estimated 20 per cent market share, this could also be an issue and even in Britain the addition of AIB's 2 to 3 per cent of the SME market to RBOS's 30 per cent share could also be a stumbling block, says the Davy report.
To finance a bid for AIB, the Davy analysts have estimated that RBOS would have to raise in excess of €12 billion to maintain its Tier One ratio at 6.5 per cent. They estimate that RBOS could afford to pay €16 a share for AIB without diluting earnings per share and up to €19 a share when synergies are factored into the calculations.
