HBOS says it never bid for banks

Retail: Bank of Scotland Ireland's chief executive, Mr Mark Duffy, said yesterday that the group never bid for either National Irish Bank (NIB) or Northern Bank.

National Australia Bank (NAB) has agreed to sell both to Danish player Danske Bank for €1.4 billion. The news ends several months of speculation about the future of both institutions.

Bank of Scotland Ireland's parent, HBOS, was named as the most likely suitor for the pair. Part of the logic behind the speculation was that they would provide its Irish business with a ready-made retail network, something it does not currently have.

However, Mr Duffy yesterday denied that HBOS was interested in either. "At no stage have we ever made a bid for either of them," he said.

"We are already in the home loans business and we are already in the motor business and you do not require a huge branch structure for those," he argued. The bank offers finance in both markets through intermediaries.

Mr Duffy added that Bank of Scotland would not need a branch structure until it had decided to offer current accounts in the Republic.

He said it was not prepared to do this until the State addressed the issues raised by yesterday's Competition Authority report, which the bank welcomed.

The report found that consumers and businesses are carrying the cost of poor competition in the Republic's banking sector. It recommended 40 measures needed to tackle the problem. Mr Duffy said that he did not expect the State to resolve the problems before the end of 2005.

Meanwhile, profits for 2004 at HBOS are poised to exceed market expectations, according to a group statement released yesterday.

HBOS said it expected asset growth to reach 10 per cent and deposits to increase, while its net interest margins for the year would be better than expected.

At the same time, it said provision for bad debts would be in line with expectations. HBOS predicted that a better than expected retail performance would leave cost increases at "substantially less" than its target of 5 per cent.

The statement said that the consensus prediction for its profit before tax and exceptionals (PBTE) was £4.55 billion sterling (€6.5 billion), and within a range of £4.41 billion to €4.67 billion. The consensus on profit before tax (PBT) was £4.47 billion, within a range of £4.33 billion to £4.6 billion.

"Overall, better than expected trading should lead us to comfortably exceed consensus expectations for PBTE," HBOS said. "We also expect to exceed consensus PBT expectations.

"Capital ratios are expected to increase over 2004 and exceed our target range," the group's statement added.

HBOS also said that it believed that a switch to international financial reporting standards (IFRS) from UK generally accepted accounting principals (GAAP) would cut its January 1st opening equity figure by around £400 million.

It said total capital ratios would strengthen as a result. Headline earnings per share (eps) would drop 3 per cent while underlying eps would slip 5 per cent, it predicted.