Sir Brian Pitman, chairman of Lloyds TSB until April, has cast doubt on the current belief in financial services that mergers with foreign rivals are a way to boost profits while avoiding domestic competition problems.
Sir Brian, whose former bank has been in talks over possible foreign deals on several occasions, said yesterday: "Markets do not yet believe in cross-border mergers. They are fine as long as you are prepared to give up your own head office, but I'd be surprised if people in other countries were on the whole prepared to give up theirs."
Lloyds called off advanced talks with a foreign financial services provider because the company was not thought to be seriously interested in building a new integrated business, Sir Brian said, speaking in London at a retail banking conference with the Institute of Economic Affairs acting as host.
Lloyds has now turned its attention to its proposed acquisition of Abbey National. This deal is before the Competition Commission, which will inform the Department of Trade and Industry on Tuesday whether it has decided that the bid is anti-competitive. The DTI will then have 20 working days to announce its final ruling. Lloyds' rival Barclays is casting around for an acquisition and is thought to be actively accessing possibilities in Europe.
Sir Brian set out a formidable list of criteria facing any chief executive who embarks on a merger. "A chief executive who undertakes a merger faces a much greater challenge than one who concentrates on organic growth," he said.