As the results season for banking and insurance stocks gets into full swing, it is interesting to compare the results of two of the industry's more recent mega-mergers.
The respective outcomes of both the Royal Bank of Scotland (RBOS) take-over of the larger NatWest and the merger of Commercial Union with Norwich Union to form CGNU are of keen interest to Irish financial executives and Irish private investors.
The contrast between the two sets of financial results for the first half of 2000 could not have been greater.
RBOS shares jumped by 11 per cent as it announced a much better performance than expected, and the chairman's statement emphasised that the integration with NatWest was proceeding on target.
On the other hand, CGNU reported a decline in profits of 6 per cent compared with analysts' forecasts of a rise of 10 per cent. These disappointing results led to a 6 per cent slide in the company's share price.
The general insurance side was largely responsible for this decline in profits due to storms in France and pressure on margins in the UK motor market.
The UK life and pensions market also continues to experience pressure on profit margins, although margins in Ireland and France have improved.
Profits were also affected by investment in e-commerce initiatives. For example, in the UK CGNU will be launching a new e-enabled wealth management service in the fourth quarter.
Although the overall results for the two companies diverged, it does seem that the RBOS-owned Ulster Bank and CGNU's Irish operations performed very strongly, suggesting that both companies will be seeking to expand their Irish interests.
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