Outlook: Pride and ego breed a banking farce

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The Independent Online
WHAT A cock-up. The recriminations were flying thick and fast last night as Bank of Ireland's proposed merger with Alliance and Leicester collapsed in a heap. It was always rather hard to see the point of this marriage of traditional Irish retail bank and converted British building society. Even as an example of cross border consolidation, it looked a less than overwhelming deal, and from the start both sides were struggling to sell its merits to the City.

Maurice Keane, Bank of Ireland's chief executive, seems to have had an even tougher job persuading his own board of its virtues. By the look of it, there was little prior consultation about the exact structure of the merger, and if Alliance and Leicester is to believed, a number of directors appear not to have known about it all. Plainly they didn't like what they saw.

The objections came thick and fast. Where would the head office be? Would the chairman have the casting vote? Who would be the lead regulator? Would there be cross guarantees of each other's liabilities, and by the way, is it to be flock or pastel wall paper and whose dinner service will be brought out on special occasions?

According to A & L, it was all to do with safeguarding non executive jobs on the court of the Bank of Ireland, nice little numbers which Ireland's great and the good are understandably reluctant to surrender. If this seems a rather far fetched, though not entirely unbelievable, explanation of why the marriage failed at the altar, it was certainly the case that both sides in this supposed merger of equals thought it was they who was taking over the other.

A & L was always keen to stress to anyone that would listen that its own man, Peter White, would be getting the top executive job, while playing to its home crowd, Bank of Ireland presented the deal as an important one over on the Brits - the acquisition of a venerable British institution.

This merger was plainly never meant to happen and it is perhaps just as well this was discovered before any real damage could be done. As it is there could yet be fallout. The deal's failure is a profound embarrassment to all concerned and if it is true that Irish non executives were not adequately briefed, then heads could yet roll.

Equally, the affair reflects badly on Alliance and Leicester, which has now twice failed to pull off a consolidating merger, first time round with the Woolwich. Mergers in the British banking sector remain as elusive and hidebound by ego and pride as ever.