Belfast Telegraph

Sunday 26 October 2014

Danske reveals why it targeted Irish banks

Danske Bank, the new owner of Northern Bank and its sister National Irish Bank in the Republic, admitted today to having made all the running to acquire its new Irish assets.

Danske Bank, the new owner of Northern Bank and its sister National Irish Bank in the Republic, admitted today to having made all the running to acquire its new Irish assets.

The group's executive chairman Peter Straarup said the bank did not hesitate when presented with the opportunity to buy National Australia Bank's banking assets in Ireland for £967m.

"We ran after it because we believe the Irish market is very attractive," he said.

He countered suggestions that Danske had paid too much, citing the strong economies in both jurisdictions.

But the acquisition news hit Danske's share price, stripping 5.8% off it on the Copenhagen bourse yesterday.

Meanwhile, Halifax Bank of Scotland, rumoured to be the "natural suitor" for the NAB banks in Ireland, made it clear yesterday that it was never close to making a formal offer.

"At no stage have we ever made a bid for either of them," a HBoS spokesman attested.

Mr Straarup said Danske was looking for acquisition opportunities outside the Nordic region, where it is dominant, after deciding recently to exit wholesale banking and focus on the retail market.

"The Irish markets are very interesting. We are situated north of Germany, but the German banking market is unattractive," he told journalists.

"Ireland has a lot to offer as a market. Growth prospects, good fundamentals and a tax regime which, although not pivotal to this takeover, is business-positive - all these factors combined to attract us to this deal," he said.

He described Northern Bank as "an under-invested franchise", implying that new money would be injected to stem the leakage of personal banking customers to its main competitors.

Mr Straarup announced that his group was looking to profit from a potential 15% reduction in costs stemming from the introduction of its own IT systems and back-office technology, and greater efficiencies within the branch networks.

This could manifest itself in job losses, he acknowledged, but suggested this would be handled through normal staff turnover.

Mr Straarup saw the smaller NIB franchise in the Republic as offering the strongest growth potential.

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