B of I 'disappointed' at Abbey's rejection

Troubled mortgage bank Abbey National today angered potential suitor Bank of Ireland by rejecting a takeover approach.

The Irish bank on Monday unveiled plans to create a combined bank, which would be listed on the London Stock Exchange but headquartered in Dublin.

Abbey said it had “carefully considered” the approach but that it was “not in the best interests of shareholders”.

Bank of Ireland said it was “surprised” and disappointed with the response.

A spokesman said: “The bank has noted the statement and is very disappointed with the response to our proposals. As we have not engaged in any negotiations the bank is now considering its next step.”

All eyes will now be on Bank of Ireland’s next move.

It was thought the Irish bank could be prepared to increase its offer.

One institutional investor said: “It seems that Bank of Ireland has got the bit between their teeth. If they can’t get approval from Abbey’s board they could go over their heads straight to shareholders.”

Observers said the move also opened the way for other potential bidders, such as National Australia Bank, which owns Clydesdale and Yorkshire Banks in the UK.

National Australia Bank has been hotly tipped in the past as a bidder for Abbey and is understood to be monitoring developments at the UK bank.

An analyst said: “Abbey is very much in play now. If I were National Australian Bank I would sit on my hands and wait and see what Bank of Ireland does.

“The Bank of Ireland statement shows very clearly that they are serious. Abbey has a duty to its shareholders to either explain why it is not prepared to take Bank of Ireland seriously or else to let shareholders make up their own minds.”