Bank of Ireland yesterday stepped up its pursuit of larger rival Abbey National by promising to publish more details in the next few days of its offer, in the hope of convincing Abbey's shareholders to take its approach more seriously.
Bank of Ireland made the move after Abbey published a statement saying its board had met on Monday and "unanimously concluded" that its suitor's initial approach on 19 September was not attractive.
Abbey added: "The most effective means of restoring value will be to achieve the operating and structural changes targeted in the interim statement."
Abbey's future has been the subject of intense speculation after news of Bank of Ireland's offer leaked. Abbey is also being pursued by National Australia Bank, which held talks with Britain's sixth-biggest bank in the Summer.
The talks broke off because Abbey's shareholders were against NAB's proposal of a dual listing for the enlarged bank, but it is understood to have made a fresh approach in the last two weeks.
Abbey is unenthusiastic about the NAB offer as well, because the Australian bank does not have sufficient resources to pay in cash the kind of premium its shareholders want.
Analysts have estimated possible synergies from a deal between Abbey and Bank of Ireland at £100m to £250m a year. A deal with NAB, which owns Yorkshire and Clydesdale banks in the UK, would not yield any more savings, analysts said.
Bank of Ireland said it was "surprised" Abbey had rejected its advances. It has had no further meeting to discuss its plans since its initial approach, which took the form of a summit between Lord Burns, the chairman of Abbey, and Laurence Crowley, the governor of the Bank of Ireland.
The Irish bank is preparing to make financial details public by the end of this week or early next week.
The offer is unlikely to be structured as a nil-premium merger, based on the lows Abbey's shares have sunk to in the last few weeks.
Its cause was not helped by the fact that the Banking Code Standards Board said the bank had breached a number of its rules, such as not allowing some customers to choose their own PIN numbers.
Bank of Ireland said it hasgiven evidence to Abbey's board that its shareholders would receive a "tangible and immediate financial benefit".
The Abbey camp believes the premium would not be enough. Abbey's institutional shareholders are also sceptical, but a number were yesterday letting it be known that they wanted to see more details of what Bank of Ireland could offer.
Abbey has been trying to find a new chief executive to replace Ian Harley, who stepped down in July. The bank is very close to completing the process. Lord Burns is thought to have conducted interviews yesterday. Favoured candidates include the bank's finance director, Stephen Hester.
Another candidate to emerge is Luqman Arnold, who was president of UBS's executive board until a management purge last December.
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