Regulators could approve within a fortnight the planned merger between Bank of Ireland and the former UK building society, Alliance & Leicester. Both institutions are waiting for regulatory approval. Once they have this, a formal announcement of the details can be made.
Bank of Ireland shares improved marginally in Dublin yesterday, rising from €16.55 to €16.70, but remain almost 18 per cent below highs of €20.30 reached just before the merger was confirmed three weeks ago. The decline in the bank's share price partly reflects market concerns about the deal.
The merger, the first between an Irish and UK financial institution, is uncharted territory for the regulatory authorities. Discussions to decide on a framework to incorporate the roles of the Central Bank here and the UK regulator, the Financial Services Authority are continuing.
Each regulator will oversee the activities of the bank operating in its own jurisdiction. The issue is sensitive, as it could set a precedent for other cross-Border mergers between financial institutions. Bank of Ireland and A&L will be hoping to reverse the negative market sentiment for the deal when it discloses the full terms of the merger. Some analysts have expressed doubts about the banks' statements that the merger will mean cost savings and additional revenues of £230 million (€300 million). There are also concerns about the make-up of its management structure.
Shareholders in both institutions will have to approve the deal and 75 per cent approval is necessary for it to go through.
Together Bank of Ireland and A&L plan to merge into a £13.5 billion company with more than 500 branches. Some 68 per cent of the group's assets will be held in the UK market with just 30 per cent in the Republic.