Vikings plunder Irish market as Danske Bank buys NIB, Northern
NAB has been hawking Northern Bank and NIB for some time and its shares rose 1.75% after the deal was announced. The company expects to make €626m on the sale.
Britain’s biggest mortgage lender, HBOS, walked away from negotiations because NAB’s price was too steep. The Bank of Scotland owner wanted to pay just 1bn and with HBOS’s appetite for an entry point to the Irish market unstated, shares in Irish Life and Permanent surged ahead by 5% yesterday.
Davy Stockbrokers banking analyst Scott Rankin said, in a note to clients: “The announcement leaves us puzzled as to HBOS’s intentions in the Irish market. Does it really think it can compete in the broader market with a branchless strategy? Perhaps it has bigger fish in mind at some point, i.e. Irish Life?”
This is Danske’s first foray outside the Nordic countries, where it is the second largest player.
It expects to gain market share by offering more products and increase efficiency by introducing highly developed IT systems.
The company has signalled its intentions to generate cost savings of close to 15% and said the cost of restructuring the acquired banks would total €200m up to the end of 2006.
However, Irish Bank Officials Association (IBOA) general secretary Larry Broderick said yesterday they have been assured that there will be no job losses or branch closures as a result of the takeover.
“IBOA will be discussing with senior management from NAG (National Australia Group) and Danske Bank the sales process in the coming days. There will be a lengthy transition period and IBOA will be working with both banks to ensure this runs as smoothly as possible. IBOA’s priority will be to ensure staff jobs, terms and conditions are protected,” Mr Broderick said.
The purchase is the second-largest cross-border banking deal in Europe this year.
Additional reporting Bloomberg
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