BoI/AIB merger canned

A possible merger between the Bank of Ireland and Allied Irish Banks was blocked by politicians last week.

The two banks announced that they had abandoned a planned joint venture through which they would share their information-technology services, and said that costs and lengthy negotiations were to blame.

The Department of Enterprise, Trade and Employment said that the merger would have a damaging effect on retail banking competition in Ireland.

“It was felt that the joint venture warranted a detailed examination because of possible impacts on competition in the retail banking market where the parties enjoy high market shares,” a spokesman said.

The Irish Times reported that all 15 Irish members of the European parliament had urged the European Commission to block the merger. The EC agreed to pass the issue back to the Irish Competitions Authority, where it was blocked.

“Both banks concluded that such an extended process would create great uncertainty and would be unduly costly. It could also have an adverse impact on customer services and would be destabilizing for staff,” according to a joint statement.

The banks also expressed surprise that the merger proposal was so vigorously opposed.