Abbey investors left reeling

ABBEY National’s two million shareholders must be furious with company chairman Terry Burns, who fought such an aggressive battle to ward-off the takeover assault by Bank of Ireland’s chief executive Michael Soden.

The Soden led raid on the British bank valued Abbey shares at stg£7.50 each.

They opened yesterday morning at just stg£4.40 but the bad news for Abbey Investors has been compounded by house broker UBS Warburg who slashed its share price target from stg£7.87 to stg£3.80 and predicted the bank would halve its 2002 dividend to 25p.

Yesterday Abbey shares continued to fall. Bank of Ireland’s shares have fallen by just 45 cents since the bank tabled its failed bid for Abbey National in October of last year.

UBS Warburg analyst Timothy Sykes in a detailed note headed “Sins of the Past”, said the company faced a “lengthy and challenging” transition back to a pure retail bank.

A fresh takeover bid by one of Abbey National’s recent suitors who range from Bank of Ireland to Lloyds TSB and National Australia Bank might receive a far warmer welcome from Lord Burns and his fellow directors that the frosty reception received by Bank of Ireland in October.

“Our 380p price target puts the stock on an equivalent 2004 (expected) multiple as the more broadly diversified Lloyds TSB, in our view generous given the uncertainties surrounding the restructuring and the need to carry wholesale risk for a period of time,” Mr Sykes told shareholders.

Abbey National is the sixth largest bank by assets (as at July 2002) in Britain, the 16th largest in Europe, and the 30th largest in the world.

If Bank of Ireland succeeded in acquiring Abbey then it would have become the eleventh biggest bank in Europe.