Alliance & Leicester (A&L) may be more susceptible to a takeover than rival Northern Rock as both Br...
Alliance & Leicester (A&L) may be more susceptible to a takeover than rival Northern Rock as both British mortgage lenders lose their protection from hostile bids this year, investors and analysts warn.
The housing giants may be attractive to a rival wanting a bigger slice of Britain's £577bn mortgage market. Larger banks may try to buy either company without drawing opposition from UK regulators.
Alliance & Leicester, which has been without a chief executive officer for two years, suffered a first-half profit decline and in November cut a target for how much it planned to boost revenue.
Northern Rock saw first-half profit grow and has the lowest costs, relative to income, of the publicly-traded British banks.
'The chances of a hostile takeover are low for Northern Rock, while Alliance & Leicester has a credibility problem that makes it more vulnerable,'' said Steven Evans, a money manager at Deutsche Bank's fund management unit who holds shares of both companies.
Alliance & Leicester's stock gained 18% last year, making it Britain's number three performer among banks.
Shares in A&L had risen to a 52-week high by close of trading on 2 January at around 860p.
Northern Rock surged 46% in 2001 and was Europe's best-performing bank stock.
Both companies sold shares to the public in 1997, ending their customer-owned status. Under terms of the conversion, both received protection from unsolicited advances for five years.
A&L protection ends in April and Northern Rock's defenses are reduced in October. A&L's Chairman John Windeler faces pressure to cut costs and boost profit after new lending dropped to zero in the first half of 2000.
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