Cr?dit Agricole rules out A&L bid

France's biggest bank, Crédit Agricole, today declared it was no longer interested in acquiring Alliance & Leicester, the UK mortgage bank.

Crédit Agricole said in May it was considering making a bid for A&L, Britain's seventh biggest bank and a perennial takeover target.

With a market value of £5.2bn and 5 million customers, A&L would have been the French company's biggest overseas purchase.

But the French bank said today: "Crédit Agricole has undertaken further analysis of A&L and the returns it could generate from an offer for A&L. In light of this analysis, Crédit Agricole has decided it does not wish to proceed with an offer for A&L."

A&L welcomed Crédit Agricole's statement.

"The announcements by Crédit Agricole have not diverted A&L from our focus on delivering our strategy and we welcome the clarification today's announcement provides," Richard Pym, the bank's chief executive, said.

"We continue to progress well against our strategic objectives as we become the UK's leading direct bank."

The investment bank Keefe, Bruyette & Woods cut its rating on A&L to "underperform" from "market perform" after Crédit Agricole declared it was no longer interested in the UK bank.

"While there may be other potential bidders for A&L over the long term, the current bid premium will evaporate. Indeed, there may be incremental concerns over the already poor operating performance," KBW said in a research note.

Crédit Agricole has turned its attention to Greece, where it wants to gain full control of the Athens-based lender Emporiki.

The French bank already has a 9% stake in Emporiki and last month offered to buy the bank for about £2bn in cash. Greek regulators have approved the bid.

Crédit Agricole's interest in overseas expansion comes at a time when French banks are looking beyond their borders for opportunities because of increasing competition at home.

In February, BNP Paribas announced a £6bn bid for Italy's Banca Nazionale del Lavoro SpA, while Société Générale is leading a group of bidders for 85% of China's Guangdong Development Bank.