Does AIB have a competitive advantage?

shoutman

Hey I have a project to do with this as the title.

Obviously enough with the AIB group being Irelands leading banking and financial services organisation it has the budget to expand ever increasingly into the global market.

But where does the competitive advantage lie? Is it in its size? The fact that it has a large customer base? Or the fact that it has openly expanded into other sectors within the financial services industry.

I would be really appreciative of any opinions given on this topic,

cheers
Luke

onedmc

shoutman wrote:

Hey I have a project to do with this as the title.

Luke

AIB has no oppertunity to expand into the global market. It's too small and although it has a businesses in Ireland and Poland, thats it. It has hardly even got a representation in other european countries not to mind the WORLD.

It missed its chance in Easter Europe, there were plenty of banks to buy but although it looked it just didnt have it.

As a retail bank its just far too small, it can never be a player with small multinational like Fortis, Hannsa etc not to mind the big boys.

As a specilist bank it has even less of a hope, whats their specilaisation ???. It has some joint ventures with real international banks but they are parnetships of convience nothing else.

When you talk about size of customer base it's tiny, yes its very proffitable and has a very large market capilsation relative to its size, but other than that.

Dont get me wrong AIB is a very strong irish bank but it is not a multinational, WBK will eventually get there when poland turn's around but even still the oppertunities to buy in europe just arn't there.

Their only hope is to joint up with another regional bank (in a european contest) cant think of any names but perhaps one of the portuguise independents.

Other Irish banks have been much more active, Anglo is a specilist bank actively looking to buy or build in europe (also Dubai, i think) . And bank of Ireland are doing alot in the area of asset management, property etc.

Thants my 2c worth

onedmc

AIB has no oppertunity to expand into the global market. It's too small and although it has a businesses in Ireland and Poland, thats it. It has hardly even got a representation in other european countries not to mind the WORLD.

It missed its chance in Easter Europe, there were plenty of banks to buy but although it looked it just didnt have it.

As a retail bank its just far too small, it can never be a player with small multinational like Fortis, Hannsa etc not to mind the big boys.

As a specilist bank it has even less of a hope, whats their specilaisation ???. It has some joint ventures with real international banks but they are parnetships of convience nothing else.

When you talk about size of customer base it's tiny, yes its very proffitable and has a very large market capilsation relative to its size, but other than that.

Dont get me wrong AIB is a very strong irish bank but it is not a multinational, WBK will eventually get there when poland turn's around but even still the oppertunities to buy in europe just arn't there.

Their only hope is to joint up with another regional bank (in a european contest) cant think of any names but perhaps one of the portuguise independents.

Other Irish banks have been much more active, Anglo is a specilist bank actively looking to buy or build in europe (also Dubai, i think) . And bank of Ireland are doing alot in the area of asset management, property etc.

Thants my 2c worth

shoutman

thanks for the reply onedmc, but doesnt the AIB group also operate in america?

onedmc

They sold their subsidary some time ago (Name escapes me). They have some shareholding in a US bank but its not a majority shareholding. And they only did this because they had spare cash after selling off previous bank.

They also have the usual repsentative office with treasury and probably other stuff. The also have a joint venture with BoNY but none of these are what you could call stragegic longterm growth operations.

Banking is going like every RETAIL business you have to be really big or really specilised. The medium sized business are constantly being squuzed by the efficiencies of scale and the specilist with large margin with tight margin. AIB are a small bank without a specilastion.

I would loved to be proved wrong so here goes .....

a) There has to be still plenty of oppertunity in Ireland for profits, and banks like RBS and BOS, despited hugh efforts, will never ever come close to AIB in terms of size in Ireland.
b) Ventures like the their IFSC operation will continue to deliver serious growth. Where AIB provide the structures, staff and controls and foreign banks provide the customers and services. (I quite like this one but it means that they become even more of a service provider and less of a brand, certainly have plenty of staff to spare for this)
c) As conslidation happens in europe AIB have the cash to form joint venture and be part of a new banking opertion. (I simply dont believe this one)
d) If buys more specilist operation like Goodbodies etc
f) The euro breaks up and Treasury become the IN thing again ............................. well I tried

shoutman

sorry to be bumping this again but a few more opinions would be brilliant.

I think onedmc is being over critical of AIB. It has showed steady growth and a massive profit in the past five years, and besides having to pay damages over the dibacle in america they have performed very well.

AIB now has a 22.5% stake in M&T, following its merger with Allfirst.

And also controls Bank Zachodni WBK in poland. Along with its Banks in the UK and ireland surely it is a big enough bank to count its size as one of its advantages over smaller banks like Bank of Scotland Ulster Bank etc. It must have the second or first largest customer base in Ireland surely.

Anyway, any suggestions would be much appreciated.

Thanks
# Luke

antoinolachtnai

No, be realistic, it really doesn't count. It's too small.

Who exactly did AIB have to pay damages to?

The size isn't necessarily the critical issue anyway. It's the ability to raise finance, rapidly acquire, integrate and manage risk. Personally, I can't see it, maybe you can.

The new Basel 2 arrangements will also make a critical difference to the European banking stage, because they will give the bigger banks a lot of cash to start acquiring. Once european banks start acquiring each other, there will be a rapid cascade, and it may not be pretty.

None of this takes away from the fact that thre are many good things about AIB.

D'Peoples Voice

shoutman wrote:

Along with its Banks in the UK and ireland surely it is a big enough bank to count its size as one of its advantages over smaller banks like Bank of Scotland Ulster Bank etc.

Are you honestly taking the pi*s?

HBOS or Bank of Scotland is one of the biggest banks in Europe, as indeed is the Royal Bank of Scotland (Incl Ulster Bank and first Active). the Profits of RBS are 7 billion sterling in 2005, AIB profits less than 2 billion euro
Please read this
http://www.scotland.gov.uk/News/This-Week/Ministers-In-The-Media/050225

Danske Bank (own Nat Irish Bank) is also bigger than AIB
Rabogroup (than own Rabodirect) are many times bigger than AIB.
Northern Rock I believe is even bigger than AIB