Nationwide may have suitor

Icelandic financial institution Landsbanki has emerged as a potential suitor for Irish Nationwide, the building society which is gearing up for a sale.

Irish Nationwide chairman Michael Walsh told members at its annual general meeting this week that management hoped to complete the sale by the end of the year. "We expect the process to commence shortly and the board is hopeful that a sale will be agreed this year with all the formal documentation, consents and resolutions concluded soon thereafter," he said at the meeting.

Sources said yesterday that one likely bidder for the society was Landsbanki, the Icelandic institution which bought Merrion Capital for €55.3 million in 2005.

The bank is keen to grow through acquisition and the success of the Merrion operation, which trebled profits to €24 million last year, means it wants to expand further in the State.

Its joint chief executives, Sigurjon Arnason and Halldor Kristiansson, have already said publicly that they would like to do more business in Ireland.

The bank itself would not comment yesterday. But it is understood that it regards Irish Nationwide as potentially a good fit with its overall businesses, which combine both personal and corporate financial services.

Along with Merrion, its other subsidiaries include Heritable Bank and Teather & Greenwood in Britain. Heritable has a strong personal business and is also active in areas like property investment lending. Teather & Greenwood is a mid-sized institutional and corporate broker.

Landsbanki also owns Kepler Equities, a stockbroker with offices in most of continental Europe's main financial centres. Landsbanki has tended to operate by allowing its subsidiaries to continue trading under their own brands and existing management.

The bank itself has branches in Iceland, Scandinavia and North America. It reported this week that income grew by 31 per cent in the first three months of the year to €230 million.

Revenue from its operations outside Iceland were €137 million, 42 per cent of the total.

Irish Nationwide is one of just two mutuals left in the Republic. A law passed last year allows it to convert to a company and sell its entire share capital to a single purchaser.

Mr Walsh said this week that a sale would be the best way of unlocking value for members. And the management has made no secret of its wish to demutualise over the last few years.

In 2006, pretax profits rose by 34 per cent from €177 million to €237 million, while profit after tax was up by 32 per cent from €140 million to €185 million. It said its underlying value has increased seven-fold in 10 years.