Irish Life & Permanent caused a bit of a surprise this week when it formally ruled itself out of the bidding for ICC Bank. This is something of a volte-face for IL&P given its previously expressed interest in bidding for ICC as a way to becoming a more broad-based banking group.
But after some serious agonising, David Went has decided that ICC will not give IL&P enough exposure in the corporate banking world to make a £300 million (€381 million) bid for ICC worthwhile and has now left the field to groups with established corporate banking activities like Bank of Ireland, IIB, Bank of Scotland-owned Equity Bank and Ulster Bank.
IL&P itself has been going through a particularly difficult time on the market, with the share price down 20 per cent in the year to date compared to the 12 per cent fall by the British life assurance sector against which Irish Life was and IL&P is now usually compared. Davy's Emer Lang, for one, believes the shares are excellent value at current levels.
According to the Davy analyst, the current market value of €2.9 billion (£2.3 billion) is a hefty discount on the sum-of-the-parts valuation of €3.3 billion (£2.6 billion). And these valuations do not ascribe any value to the potential revenue enhancement that the group should be able to harness from cross-selling Irish Life's products through the Irish Permanent branch network.
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