A&L to bid for insurer

Alliance and Leicester is gearing up to launch a multi-billion pound takeover of a life insurance company - a much larger acquisition than previously thought - in a bid to outflank its banking rivals and enhance the value generated from its 5.5 million customers.

On Friday Alliance chief executive Peter White said the bank would either find an acquisition in the UK or return a portion of its pounds 800m cash pile to shareholders, after reporting slightly depressed interim pre-tax profits of pounds 178m after taking into account the cost of converting from a building society. It ruled out any "foreign adventures".

Any acquisition would not be limited to the pounds 600m to pounds 800m range. "Their ambitions run bigger than that," a source said.

The company is thought to be considering targets valued at between pounds 1.5bn and pounds 3bn, which would put life and general insurance companies such as Guardian Royal Exchange, Britannic and United Insurance in the frame.

"At the analysts' meeting there was a definite indication that an acquisition of the size of Birmingham Midshires [taken over last week by the Royal Bank of Scotland in a pounds 630m deal] was not on the cards. They told us they are thinking bigger," said one banking analyst.

Were it to proceed with this strategy, Alliance and Leicester would consider issuing shares to fund the acquisition, which would allow institutions to increase their shareholdings.

So far institutions have been frustrated by the tendency of Alliance members who qualified for shares on conversion to plc status to retain their holdings. The company estimates that 70 per cent of its shares are still held by account holders.

John Caine, head of corporate communications for Alliance and Leicester, said the bank was not going to limit itself in its ambitions, but refused to elaborate on possible takeover targets.

"We have not put a timetable on on the acquisition, and we will not overpay. Other than that, we are keen to explore all options," Mr Caine said. He said the bank would choose its target carefully as any merger or acquisition would nullify its five-year statutory protection from takeover under the Building Societies Act.

The implication of this would be that it could be that even a small acquisition could expose the bank to an unwelcome suitor. "It would be imprudent of us not to go for a big acquisition to protect ourselves," he said.

Mr Caine said the share buyback, mooted at analyst briefings on Friday, would be a last resort: "We have only been a public company for 17 weeks. To say to our investors, sorry, we can't think of anything to do with your money, so have it back, smacks of a pretty weak strategy."

Meanwhile Halifax is also expected to put insurance companies on bid alert when it confirms it too plans acquisitions to spend some of its pounds 3bn cash pile when it announces interim results next Thursday.

Halifax,which floated on the stock market in June, is expected to report pre-tax profits of pounds 770m for the first half of 1997. This would represent an increase of 18.5 per cent, taking into account a one-time charge of pounds 88.1m in the first half of 1996 to cover conversion costs.

Since building societies are required to have a stronger capital base than banks, Halifax became a public company with about pounds 3bn more in capital than it needs. That could grow to almost pounds 5bn by the end of 1998 if it does not find ways to reduce the capital.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
The Bach Choir has been crowned the inaugural winner of Sky Arts’ show The Great Culture Quiz
arts + ents140-year-old choir declared winner of Sky Arts' 'The Great Culture Quiz'
Life and Style
food + drink
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Carlton Senior Appointments: Private Banking Manager - Intl Bank - Los Angeles

$200 - $350 per annum: Carlton Senior Appointments: Managing Producer – Office...

Carlton Senior Appointments: San Fran - Investment Advisor – Ind Advisory Firm

$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas