Bank of Ireland shares recover over 6%

Shares in Bank of Ireland gained 6.65 per cent yesterday to close 60 cents stronger at €9.65 as the stock eased back losses after Abbey National rebuffed its takeover proposal.

But the recovery was seen as a reflection of the share's inexpensive price and analysts continued to question the merits of the bank's interest in Abbey.

A spokesman said Bank of Ireland still planned to publish details of its proposal on Monday, despite the hammering taken by its shares this week. The bank has denied that its proposal deal was a nil-premium but declined yesterday to outline the value its proposal would put on Abbey's stock.

Analysts believe it may have made an indicative bid of between £6.50 and £7 sterling when Abbey's shares were trading at £6.10 at the time the proposal was made.

Shares in Abbey rose this week on the news and they closed up 5.8 per cent at £6.22 sterling on the London market yesterday.

There was no comment from Lloyds TSB, which was rumoured to be running the rule over Bank of Ireland given the weakness in its share price. Ulster Bank-owner Royal Bank of Scotland also declined to comment on rumours that it too was looking at Bank of Ireland.

The closing value of Bank of Ireland shares yesterday was 57 cents short of the close on the previous Friday, the last day's trading before its interest in Abbey emerged. The stock closed as low as €8.68 during the week and the value of the average trade yesterday was €9.34 per share. Some 2.48 million Bank of Ireland shares changed hands yesterday.

The Bank of Ireland spokesman said the proposal to be published next week had not changed since Abbey's board had rejected it. "I believe that the information vacuum has had an inevitable consequence," he said, referring to the fall in the bank's share price.

But while the document is believed to outline proposed cost savings, synergies and strategic details, one broker questioned why the bank would release details of its plan if the deal was unlikely to go ahead.

He said: "There are savings and synergies but one thing we don't know is what problems there might be in Abbey's wholesale business." Analysts had questions about asset quality and indebtedness in the division, the broker added.