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NAB confirms second bid for Abbey
SYDNEY, Australia (CNN) -- Australia's biggest bank, National Australia Bank, confirmed Wednesday it made another unsuccessful offer for Abbey National, the British bank that on Tuesday rejected a merger approach by Bank of Ireland. The NAB, in a statement to the Australian Stock Exchange, said it had approached the Abbey board about an offer, but the talks did not result in any agreement. It said the discussions "have now ceased". However, observers are not ruling out a resumption of talks. The Australian bank, which has a market value twice that of Abbey, is understood to have made the takeover approach last week. This follows an earlier attempt to strike a merger with Abbey in June. Since then Abbey's financial situation has worsened, with bad loans and bond losses leading to a slump in profits and the departure of chief executive, Ian Harley. Three approachesAbbey, Britain's sixth-largest bank with more than 15 million customers, has a market value of about £7 billion ($11 billion), compared with $27 billion for the NAB. Apart from the NAB and Bank of Ireland bids, Abbey was also the target of an approach from Lloyds TSB last year. Australia's NAB has been keen to expand its U.K. customer base, because Australian government policy prevents it from buying any of its big rivals at home. A merger of Abbey and the Bank of Ireland -- one of Ireland's top two banks -- would have created a group with a market value of about $22 billion. The Irish bank has a current market value of about 11 billion euros ($11 billion). But Abbey said on Tuesday the deal was not in the best interests of its shareholders and it would concentrate instead on cutting costs to revive profits. (Full story) Restoring value"The board unanimously concluded that the most effective means of restoring value to Abbey National shareholders at this time will be to achieve the operating and structural changes targeted in the interim statement on July 26,'' the bank said. The Bank of Ireland said it was surprised by the Abbey National rejection. Abbey National's shares closed 3.5 percent higher at 554 pence Tuesday after sinking to a seven-year low on Friday. The shares rose about 6 percent on Monday after the Bank of Ireland said on Sunday it had made an informal approach. In Australia, NAB shares are 1.25 percent lower at A$32.50 in late morning trade Wednesday. The broader market is just into the red.
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