Abbey may have to reconsider BoI offer

THE board of the British bank Abbey National plc may be forced to re-think its rejection of Bank of Ireland's takeover offer if institutional shareholders decide they like the Irish bank's plans.

In the coming days the Bank of Ireland (BoI) is to publish a detailed statement on its proposal to take over Abbey National. The statement will be the Irish bank's major volley in the opening of hostilities with the Abbey board. It is believed the leak about BoI's proposals came from the Abbey National side of the tussle.

Major institutional shareholders in Abbey have already sought assurances that the board has given careful consideration to BoI's offer.

Philip Gibbs, fund manager with Jupiter Asset Management, said Abbey National management should at least enter discussions about the proposals. "I think they should look at what is on offer to see if it is in the interest of shareholder value."

If BoI's statement convinces institutional shareholders of the merits of its case, Abbey National executive chairman Lord Burns could come under severe pressure to enter talks with BoI.

BoI could embarrass Abbey National senior management if it appears the latter have opposed a takeover simply to preserve their own positions.

However BoI can not be too aggressive with Abbey staff as the success of banking mergers depend on retaining key staff and clients.

If they fail to land the Abbey National prize BoI Chief Executive Mike Soden and Governor Laurence Crowley could find themselves unseated.

Since Sunday talk of the deal has knocked close to 1.56 billion off the value of Bank of Ireland stock.

Abbey National has seen off three suitors in recent years. Yesterday one of the most persistent, National Australia Bank (NAB) confirmed it had approached the Abbey National board once again.

"The discussions regarding the National's proposal did not result in any agreement and have now ceased," said the Australian bank. It owns National Irish Bank and the UK's Clydesdale Bank and Yorkshire Bank.

NAB, like BoI, has never had its foot inside Abbey's door. Therefore neither suitor has ever really given Abbey's books a good "due diligence" examination.

No one believes NAB has gone away. And it would suit Abbey to see two suitors battling it out without having to give outsiders early access to whatever secrets may be hiding in Abbey's accounting books.