Abbey National closes door on BoI merger

Abbey National closed the door on a possible tie-up with Bank of Ireland today by insisting it was better off on its own.

The UK’s second biggest mortgage lender said there was “no material new information” in detailed proposals issued by BoI to win it over.

It added there was a “questionable strategic fit” between the two groups and said BoI’s financial resources would “bring little” to a group of its size.

Abbey’s statement followed BoI’s decision to release the full terms of its offer, initially rejected by the UK bank’s board of directors a week ago.

BoI said it would pay Abbey shareholders £1.9bn (€3bn) in cash under a deal valued at between £9.8bn (€15.5bn) to £10.3bn (€16.3bn) when based on yesterday’s closing prices.

The bank added that it believed a tie-up could generate £400m (€631m) in cost savings and other benefits in the first four years.

James Leal, banking analyst at Gerrard, said: “Unless Abbey’s shareholders lobby the management to accept, this is probably the end of it.”