Bank of Ireland has made an approach to take over Britain's sixth biggest bank, Abbey National, writes Siobhán Creaton, Finance Correspondent
Bank of Ireland governor, Mr Laurence Crowley, held preliminary discussions with Abbey National's executive chairman, Lord Burns, in recent weeks which, if concluded, would see the Irish bank emerge as Europe's 12th largest financial institution.
In a statement yesterday, Bank of Ireland said it was proposing to establish a "unified corporate structure". This suggests the Irish bank is seeking to take over and control Abbey National rather than to merge with it.
The bank would move its primary listing to the London Stock Exchange and retain a secondary listing in Dublin. This would reflect the shift in the bank's business, which would be predominantly based in the UK. Bank of Ireland has stated that it will continue to have its headquarters in Dublin.
The statement said any discussions so far had been informal and that there was no certainty that a deal would be concluded.
The bank stressed the takeover could potentially create significant value for Bank of Ireland and Abbey National shareholders. To- gether, the two banks would have a stock market valuation of more than €21 billion.
Sources close to Abbey National were yesterday indicating that the British bank would spurn any formal approach from Bank of Ireland. "It is extremely early stages and certainly little likelihood that anything will come of it," according to one source.
The approach will be confirmed in a statement to the Irish and London Stock Exchanges this morning and both banks will be anxious to gauge market reaction to the news.
Abbey National has been looking increasingly vulnerable to such an approach over the past year, given its very poor financial performance.
The bank is also currently without a chief executive since Mr Ian Hartley resigned in July.
Abbey National's share price closed at £5.05 in London on Friday, close to a seven-year low, as investors grow increasingly disillusioned with its weak performance.
In 1999 Bank of Ireland attempted to merge with Alliance & Leicester.