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Commercial banks

$11.4 Billion Merger Talks Between Alliance & Leicester and Bank of Ireland Confirmed

Strategic Insights

— 2 min read

The Bank of Ireland and Alliance & Leicester are set to confirm their talks on creating an $11.4 billion group, the largest British banking deal since Lloyds bought the TSB Group in 1995. The merged bank would rank as the eighth-largest in Britain in terms of market capitalization, with the Bank of Ireland being the majority player, holding a market capitalization of $6.3 billion, or about 55 per cent of the enlarged business. The new venture is expected to have its headquarters in Dublin, with Peter White, the head of Alliance & Leicester, tipped as the combined group's chief executive.

Key Takeaways:

  • The merger talks between the Bank of Ireland and Alliance & Leicester are set to create an $11.4 billion group, the largest British banking deal since Lloyds bought the TSB Group in 1995.
  • The Bank of Ireland will be the majority player, holding a market capitalization of $6.3 billion, or about 55 per cent of the enlarged business.
  • The merged bank will have its headquarters in Dublin, with Peter White, the head of Alliance & Leicester, tipped as the combined group's chief executive.
  • The deal is expected to lead to annual cost savings of $250 million within two years of completion.
  • The banks are expected to pool their assets into a single operating company, but will operate as separate entities, retaining separate listings in London and Dublin.
  • The banks believe the tie-up between the UK and the euro zone will allow both businesses to generate new business, as well as limiting each bank's exposure to trading conditions in their respective home markets.
  • The banks are also considering returning $1 billion of capital to shareholders to sweeten the deal.
  • The merger is expected to propel Bank of Ireland above the market leader, Allied Irish Banks (AIB), and would likely spur AIB to also seek a partner, analysts said.

Statistics:

  • Market capitalization of the enlarged business: $11.4 billion
  • Market capitalization of Bank of Ireland: $6.3 billion
  • Market capitalization of Alliance & Leicester: $5.1 billion
  • Expected annual cost savings: $250 million
  • Projected timeframe for cost savings: 2 years
  • Amount of capital being considered for return to shareholders: $1 billion

Sources:

  • " £20bn merger talks between Alliance & Leicester and Bank of Ireland" by David King, The Daily Telegraph
  • "Bank of Ireland to issue statement on possible merger" by Nuala Mcluskey, Irish Independent
  • "Bank of Ireland eyes Alliance & Leicester" by Matthew Vincent, The Daily Telegraph

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