Outlook: Bank of Ireland

Outlook: Bank of Ireland

AFTER ALL that waiting and speculation, the stock market finally got a little bit of banking sector "corporate activity" yesterday (wonderful City expression this, as if to imply that anything as mundane as just managing and running a business is corporate "inactivity") - and a cross border transaction at that. Unfortunately it wasn't quite what everyone had in mind.

Bank of what and Alliance and who? This hardly looks like a transaction to set the pulse racing or the City's tills ringing. Even together these banks will scarcely be any larger in terms of market capitalisation than Royal Bank of Scotland, while the cross border nature of the merger doesn't make for mouth watering cost cutting potential or a clear line of management command. Indeed, it could very well be a recipe for bitter internecine management warfare and paralysis.

Still, something is better than nothing and the stock market duly marked the whole sector higher, confident in the hope that today's little rain drop might turn into tomorrow's deluge.

That may or may not be the case, but what of this particular tie up? If it were not so clearly defensive, it would certainly seem both odd and inappropriate. What do these two organisations hope to achieve? The cost savings at just pounds 200m are scarcely worth the bother, and in any case are probably not much higher that the two companies are capable of achieving independently.

Peter White, bored, restless and, by some accounts, looking for a move, gets a new train set to play with, but that hardly justifies the transaction from a shareholder value perspective. However, by the look of it Alliance and Leicester is getting the better half of the deal on another front too - 45 per cent of the action for just 42 per cent of the profits. Furthermore, its shareholders get a stake in one of the world's fastest growing economies.

In other respects, the merger looks defensive, tying the former building society up in an Anglo-Irish alliance that would be difficult to bid for, because of its key position in the Irish economy, and even more difficult to disentangle. Just the job for when A & L's takeover protection runs out in 2002, its executives must be thinking.

As for Bank of Ireland, it would seem to deserve better. With little room left to expand at home, and certainly no domestic merger prospect that the authorities would tolerate, it has no option but to look outside its own borders. But the Alliance & Leicester, a traditional mortgage lender in a mature, low growth market? Critical mass is gained, without apparent loss of independence, but it sure is an unexciting path for BoI to take.

It may also open the floodgates to other bidders, keen to break up this cosy little merger and gain a foothold in Ireland. It is unclear what position the Irish Government would adopt in the event of a bidding free- for-all, but Bank of Ireland may find it has opened Pandora's box.

News
Alan Bennett has criticised the “repellent” reality shows which dominate our screens
tvBut he does like Stewart Lee
Life and Style
The Google Doodle celebrating the start of the first day of autumn, 2014.
tech
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Sport
David Moyes and Louis van Gaal
football
PROMOTED VIDEO
News
i100
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
News
Former Governor of Alaska Sarah Palin, left, with her daughter, Bristol
newsShe's 'proud' of eldest daughter, who 'punched host in the face'
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits