Scores of recent news reports have concentrated on potential takeover bids for Alliance & Leicester. They may not be so far from the truth. A takeover bid will not be as straightforward as it first appears, but Alliance & Leicester cannot stave off interest from suitors such as Abbey National forever.
Alliance & Leicester's legal immunity to unwanted bids, which had been granted for five years when the former building society floated, ends on Monday. This has brought a great deal of press speculation that Alliance & Leicester's days as an independent bank are coming to an end.
A number of players have already been touted as potential bidders for the bank. Royal Bank of Scotland, Lloyds TSB, Barclays, Abbey National and NAG are all names that have been mentioned. However, a takeover bid by some of these parties may not be so straightforward as it first appears.
Offers by any of the larger banks would prompt competition concerns, while NAG has troubles of its own following its problematic foray into the US market. This leaves Abbey National as the clear favorite to launch a take-over bid. Furthermore, similar strategic goals mean that the two former building societies would be a good combination.
Both banks have announced plans to focus on core product areas, namely current and savings accounts, personal loans and mortgages. Other products such as credit cards are considered to be secondary. In addition, both players have announced their intentions to break the stranglehold of the Big Four banks on the small business banking market.
However, the speculation surrounding Alliance & Leicester's future has driven its share price up from 810 pence at the beginning of the year to current highs of around 900 pence. This high share price means that Alliance & Leicester would be an expensive purchase and sheds doubt on whether shareholders of interested parties would authorize a bid for the bank.
Yet if no bids are forthcoming in the near future its share price will undoubtedly fall, thus throwing open the door for potential buyers. Alliance & Leicester's day of reckoning, it appears, is drawing near.
Related research: UK Retail Banks and Building Societies 2002