A&L dampens bid and merger hopes

Alliance & Leicester poured cold water yesterday on the bid and merger hopes that have surrounded the mortgage bank and said it was more focused on its cost-cutting plans as an independent entity.

Reporting a 15 per cent fall in first-half profits due to spending on a restructuring, the bank said it was committed to an independent future, although it made a slow start towards revenue growth targets set last October. The bank, which has been linked to several potential suitors including National Australia Bank and Abbey National, gave little away on the possibility of a bid or merger. "Consolidation is important to the market, but for us it's pretty much a sideshow," said John Windeler, the executive chairman.

Mr Windeler declined to comment on whether the bank had received any specific approaches. He said the bank's board had an obligation to look at any offer "but the focus for our shareholder value growth is on the independent strategy".

Pre-tax profits in the six months to 30 June fell to £208m from £246m in the same period last year. This was towards the top end of analyst forecasts.

The fall had been expected, mainly because of a £30m investment in new technology. That was part of a shake-up to boost annual revenue growth to 6 per cent between 2000 and 2003, by selling more products to customers, as well as cutting costs by £100m over three years.

Group revenues grew a modest 1.8 per cent to £622.8m, while the the bank said it was ahead of budget on plans to reduce annual running costs by £20m by the end of 2001. Bad debt provisions rose to £27m from £16m.