A major European bank is unlikely to acquire AIB and Bank of Ireland because the benefits would not outweigh the costs involved, the managing director of HypoVereinsbank, Germany's second-largest bank, has said.
At a German/Irish Chamber of Commerce lunch yesterday, Mr Robert Gogarten said that co-operation agreements between banks within the euro zone were the best means of entering new markets. It made more sense to combine strengths and identify fields of interest so that the increasing needs of customers could be served. "Selling the product requires a local face for local customers," he said.
He said mergers and acquisitions made sense if competitors were being taken over, although cost savings were not the objective. In that regard, he would not rule out a merger between Bank of Ireland and AIB. "They are competitors and they will be competing against big institutions. For certain products, you need size." Customers had to feel it made sense to work with the bank, which was the rationale for merging with competitors. "We have to be of value in the view of the customer," he said.
HypoVereinsbank, with assets of DM901 billion (€460.66 billion), was formed last year from the merger of two Bavarian regional banks, Hypotheken und Wechsel Bank and Vereinsbank. But a controversy has erupted over the merged entity following the discovery of DM 3.5 billion in property debts.
