Former competition chairman backs B of I and AIB merger

CURRENT ACCOUNT: AIB chief executive Mr Michael Buckley has insisted the bank would remain independent.

Current Account has noted the timely intervention by former Competition Authority chairman, Dr Patrick McNutt, into the debate about a merger between the Republic's two biggest banks.

Dr McNutt, who now works with Dublin-based economic consultancy firm Indecon, has come out in favour of Bank of Ireland chief executive Mr Michael Soden's proposal to merge with AIB as one possible response to the growing competitiveness challenge facing the Irish banking market.

Writing in the Irish Banking Review, he focused on the key hurdle that many observers believe would face any such link-up, namely securing EU approval for the merger.

He believes this merger may result in little distortion of competition within the EU and, if the management of the two banks were to aspire to become a force in European banking, it may be the sine qua non of their banks' survival as domestic banks.

The Irish Bank Officials Association, the only persistent strong voice against Mr Soden's plan, was quick to accuse the bank of using "vested interests" to promote its ambitions.

Dr McNutt's views were at odds with those expressed by his predecessor at the Competition Authority, Dr John Fingleton, although he contends this issue, if ever embraced, will be decided in Europe.

It is another phase in preparing the groundwork for a merger.Already the two banks have merged their information technology services, a move which was stated to have been unrelated to any outright merger in the future.

Mr Soden has now publicly staked his reputation on achieving this merger within his five-year term in Baggot Street.

Commentators will be watching developments with interest.