Anglo ‘not ripe for takeover’

ANGLO Irish Bank is not ripe for a takeover according to leading analysts at stockbrokers Goodbody and Dolmen.

However, in notes to clients in recent days the stockbrokers gave conflicting advice on the shares with Goodbody advising clients to buy Anglo shares and Dolmen recommending a sell and a move into HBOS as providing more value at current levels in the European bank sector.

There has been market speculation following the move by Royal Bank of Scotland to take over First Active that Anglo Irish Bank may be the next target.

"There are at least two major reasons why the risk of this happening in the foreseeable future is remote," said Dolmen's Stuart Draper.

The main argument cited by Mr Draper is the lack of potential synergies.

"The first reason is that with a cost/income ratio less than 30%, there is very little potential to generate significant synergies from the elimination of overlapping costs," he added.

Mr Draper believes one of the major reasons for Anglo's spectacular success in recent years, has been its unique credit approval process and relationship business culture. "These key competitive advantages would be destroyed by being part of a much larger organisation," he added.

Commenting on the possibility of a takeover Goodbody analyst Len Riddell said: "We believe the view that Anglo could be a potential bid target is wholly without merit.

"There is no bid premium priced in at these levels, and such a view ignores both the lack of synergies (cost and revenue) available to any bidder as well as the obvious impact on Anglo's credit and human cultures two of Anglo's key competitive advantages.

"If a stock is only ever a buy or a sell we continue to believe that Anglo is a buy."