Future strategy of BoI will be very different, says chief executive Soden

BANK of Ireland's future strategy will be radically different from the audacious bid for Abbey National in the UK.

In the future, takeovers will range from €500m to €2 billion dramatically short of the €7-8bn represented by the move on Abbey National.

Bank of Ireland chief executive Mike Soden said he made no apologies for trying to take over a bank substantially bigger than BoI.

It would have been a "transformational" deal had it come off, he said.

Not only that, but he said the bank had the staff and managerial skill to turn Abbey National around, something its current management clearly lacked.

It is understood BoI regarded its chances of winning the deal as 70/30 against.

But Mr Soden believed it was an opportunity too good to ignore and was prepared to gamble on that.

"I have no apologies to make for our perfectly legitimate aspiration to achieve quantum growth through a transformational transaction such as Abbey National."

Failure to deliver in no way implies that the bank is now on the back foot, he said.

But there is a market perception that Mr Soden will have to work hard to restore credibility with the markets in the months ahead. Others say it is so badly damaged his days are numbered.

Speaking at a news conference in Dublin yesterday to introduce the group's first half figures, Mr Soden said the bank will continue to grow in the UK through acquisitions. Over time it will account for the larger slice of the bank's profits, he said.

Expanding on future strategy he said: "our natural footprint is in these islands, but, self evidently, the greatest potential for growth is in the UK."

BoI will continue to look for suitable acquisitions in that market that will make full use of the bank's management skills and of its resources.

During a question and answer session he said the bank has generated ample capital over the years and, where it made sense, some could be given back to shareholders, he said.

Its mandate is to make the best use of the capital for shareholders and if giving some of it back in the form of higher dividends or through a share buy back then that would be done.

But Mr Soden said the objectives of the bank in the immediate future are cost containment and expansion in the UK in particular.

He also warned as well as good cost management, the return on capital which the bank has managed to keep well above 20% for several years is also critical to current and future strategy.

Failure of businesses to deliver that kind of growth will result in them being sold off, he said.