Former Competition Authority Head Says Time May Be Right For Irish Banking Mergers

by Philip Morton, Investors Offshore.com

02 July 2002

Former Chairman of the Irish Competition Authority, Patrick McNutt suggested recently that the time could be right to consider a merger between AIB and Bank of Ireland, despite traditional fears that such a move would be bad for competition.

Writing in the latest issue of the Irish Banking Review, Mr McNutt stated that the expected easing of competition criteria by the Competition Authority could lead to an 'enlightened merger policy' which would allow the Republic's two largest banks to combine forces in order to make a greater impact on the global stage.

Dismissing concerns that job losses and a lack of price competition would likely result from such a move, the former Competition Authority chief argued that branch closures and subsequent job losses are expected anyway, and that as a result of increasing global integration, domestic banks have already lost a great deal of autonomy with regard to their charging structures

''Market structures are becoming more concentrated. This is neither an Irish, European or American phenomenon; rather it is global. It is a natural consequence of growth, whether organic or by acquisition,' he wrote in the Irish Banking Review, adding that:

'If the two main Irish banks wish to become a force in Europe, as financial markets consolidate in the emerging eurozone, a merger may become the sine qua non for their survival as domestic banks.'

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