The speed and tone of Abbey National's rejection of Bank of Ireland's latest advance has left our second largest bank in danger of looking a little foolish. For a second time in a month, overtures from the grand old lady of Irish banking - established by act of parliament in 1783 - have been rejected by a former building society that only came of age as a bank in 1989.
The tart riposte from the sixth largest British bank to the unsolicited approach from Ireland was that there is only a questionable strategic fit between the two organisations, and Bank of Ireland's financial resources would bring little to an organisation the size of Abbey National. The market took a similar view and marked down Bank of Ireland shares, fearing it was about to bite off more than it could chew.
The emphatic nature of the rejection indicates further attempts by Bank of Ireland to woo Abbey National are doomed. But a faint heart never won a fair maid and Bank of Ireland is now appealing directly to Abbey National's larger shareholders to see if they will match-make in a romance that would create the 12th largest bank in Europe.
Whether anything comes of this remains to be seen, but it does look at this stage like another setback is in the offing for Bank of Ireland's chief executive, Mr Michael Soden, and his ambition to build his organisation into a significant player on the European stage. It follows the failure to get off the ground of his proposal earlier this year that Bank of Ireland should merge with AIB.
Mr Soden should not be unduly castigated. He is, after all, only trying to do what he said he would when he took over the top job at Bank of Ireland last year. He made it clear that the bank either had to grow itself into a significant European player or else face being consumed by a larger rival. But the danger is that in his enthusiasm to deliver on his promises he may be doing more harm than good.
There is no doubt that the bank's credibility has been damaged by both the market's reaction to the Abbey National bid and the way in which its approach appears to have been dismissed, almost out of hand. The more ineffectual the management of Bank of Ireland seems, the more likely the bank will become a takeover target in its own right. ...
Mr Soden and his advisers should bear this in mind as they go knocking on the doors of Abbey National's larger shareholders. Damage limitation should be the order of the day.