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            T R O U B L E D   C O M P A N Y   R E P O R T E R

                             E U R O P E

               Thursday, October 17, 2002, Vol. 3, No. 206


                              Headlines

* B E L G I U M *

LERNOUT & HAUSPIE: SEC Files Suit for Accounting Fraud

* F R A N C E *

ALCATEL: European Space Agency Awards Alcatel the Amerhis System
ALCATEL: Provides Wireless Location Solutions With SnapTrack
VIVENDI UNIVERSAL: Creditors Extends US$1.62 BB Credit Facility
VIVENDI UNIVERSAL: Plans to Issue Bonds Backed by Ticket Sales
VIVENDI UNIVERSAL: BT Sells Cegetel Stake for GBP2.5 Billion
VIVENDI UNIVERSAL: Sells Shares in U.K. Holdings

* G E R M A N Y *

COMMERZBANK AG: Convertible Bonds Chief Resigns; Reason Unclear
CONSORS DISCOUNT: Gives Up Swiss Unit for Undisclosed Amount
MOBILCOM AG: Obtains Extension for UMTS Loan Refinancing
MOBILCOM AG: Gov't Freezes Release of Rescue Package Balance
MOBILCOM AG: Introduces Bonus Program for MobilCom Xtra Customers

* I R E L A N D *

ELAN CORPORATION: Announces Webcast of Financial Results
PARTHUS TECHNOLOGIES: Notifies Scheme of Arrangement Hearing

* I T A L Y *

FIAT SPA: Cooking One Big Sale Before Year's End to Cut Debts

* N E T H E R L A N D S *

VERSATEL TELECOM: Court Confirms First Amended Reorg. Plan

* P O L A N D *

NETIA HOLDINGS: Nasdaq Delists American Depository Shares
NETIA HOLDINGS: Introduces New Tariff Plans for Services

* R U S S I A *

MDM BANK: Goes Up Moody's Rating Ladder to "B-" From "CCC+"

* S W I T Z E R L A N D *


ABB LTD: Announces Resignation Of Martin Ebner From Board

* U N I T E D   K I N G D O M *

ABBEY NATIONAL: Bank of Ireland Reveals Strategic Proposal
ABBEY NATIONAL: Takeover Rumors Fuel 11% Rise in Share Price
AES DRAX: Fitch Dwgr Drax Holdings & Inpower Ltd to 'CCC'
ARM HOLDINGS: Gloomy Assessment of Prospects Turns Off Investors
CABLE & WIRELESS: Irish Division Partners With Avaya in Ireland
CITY GENERAL: Issues Notice Regarding Scheme of Arrangement
EQUITABLE LIFE: Regulatory Probe on Ex-auditor Favors Firm
INSTINET GROUP: Announces Third-Quarter 2002 Results
INVENSYS PLC: Stocks Up as Manufacturing Sector Slowly Recovers
RAILTRACK PLC: Moody's Affirms and Withdraws Ratings
TXU EUROPE: Moody's Cuts Special Purpose Vehicle to Caa2
TXU EUROPE: Ofgem Assures Ample Power Even If Firm Turns Off Line
TXU EUROPE: Receives Interest From British and German Investors
TXU EUROPE: Top Honcho Does Not Discount Sale of British Unit
TXU EUROPE: Defaults on Monthly Bill Owed to AES Corp. Affiliate
UK COAL: Employees to Cast Vote Regarding Strike Action


=============
B E L G I U M
=============


LERNOUT & HAUSPIE: SEC Files Suit for Accounting Fraud
------------------------------------------------------
On October 10, 2002, the U.S. Securities and Exchange Commission
office in Washington, D.C., announced it has filed a civil
injunctive action with the United States District Court for the
District of Columbia against Lernout & Hauspie Speech Products,
N.V. alleging accounting fraud.  This action is styled
"Securities and Exchange Commission v. Lernout & Hauspie Speech
Products, N.V."

A free copy of the complaint is available at:

           http://bankrupt.com/misc/SEC_Complaint.pdf

In the complaint, the Commission alleges that, from 1996 through
the second quarter of 2000, while its common stock was listed on
the Nasdaq National Market System and Nasdaq Europe, Lernout &
Hauspie engaged in a variety of fraudulent schemes to inflate
its reported revenue and income.  The result of this conduct was
an international financial scandal, the destruction of Lernout &
Hauspie as an operating company, and a loss of at least $8.6
billion dollars in market capitalization, borne by investors in
Belgium, the United States and elsewhere.

According to the Commission's complaint:

(1) The Dictation Consortium and Brussels Translation Group
    Transactions

    Between 1996 and 1999, Lernout & Hauspie improperly recorded
    over $60 million in revenue from transactions with two
    Belgian entities:

     -- Dictation Consortium, N.V., and
     -- Brussels Translation Group N.V.

    These entities were formed for the specific purpose of
    engaging in transactions to allow Lernout & Hauspie to claim
    revenue from its own research and development activities,
    which otherwise would not have resulted in reported revenue
    unless and until the projects resulted in marketed products.
    Lernout & Hauspie subsequently acquired both of these
    companies on terms that repaid the amounts they had
    previously paid to Lernout & Hauspie, plus a substantial
    profit.  Because the transactions were, in substance,
    disguised loans and not sales or service transactions,
    Lernout & Hauspie should not have recognized revenue from
    those transactions under Generally Accepted Accounting
    Principles;

(2) The Language Development Companies

    By late 1998, the revenue boost obtained by Lernout &
    Hauspie from the Dictation and BTG transactions had waned.
    To bolster its reported revenue, Lernout & Hauspie launched
    a new and elaborate fraudulent scheme to, in essence,
    create additional customers. These new customers, dubbed
    "Language Development Companies" or LDCs, enabled Lernout
    & Hauspie to claim revenue of $102 million in license fees
    and $8.5 million in prepaid royalties in 1998 and 1999
    combined, giving the false impression of exponential growth.
    The LDC revenues were not separately identified by Lernout &
    Hauspie in its financial statements, but instead were buried
    in overall revenue figures.

    The LDCs were structured in a manner that masked their
    actual role at the time of their creation. All were private
    companies.  Most were incorporated in Singapore, although
    they had no actual operations in that country.  The
    "managing director" of many of the Singapore LDCs was a
    Belgian national associated with Lernout & Hauspie.

    Lernout & Hauspie, in its public disclosure, contended that
    the LDCs were formed to develop speech recognition and
    translation software applicable to various regional
    languages.  In actuality, the LDCs were little more than
    shell companies created, like Dictation and BTG, as a means
    for Lernout & Hauspie to improperly fabricate revenue.  The
    LDCs had few, if any, employees, and were dependent on
    Lernout & Hauspie personnel for research and development
    activities.  None of the LDCs ever produced any significant
    product.

    Lernout & Hauspie supplied or arranged for others to supply
    financing for at least certain of the LDCs.  For example, in
    late 1999, Lernout & Hauspie solicited an investment bank in
    Bahrain to help in the search for investors for two LDCs.
    The investment bank advanced Lernout & Hauspie $8 million
    for technology licenses for the LDCs, with the understanding
    that Lernout & Hauspie would repurchase the licenses at a
    substantial premium (representing a 25% internal rate of
    return) should the investment bank be unable to locate
    investors to fund the LDCs.

    Thus, to the extent Lernout & Hauspie obtained funds from
    the LDCs, these funds were subject to material conditions
    imposing significant potential liabilities on Lernout &
    Hauspie.  Lernout & Hauspie, however, did not disclose these
    arrangements and did not reflect its potential liabilities
    to the LDCs on its balance sheet.

(3) The Fraudulent Korean Transactions

    From September 1999 to June 2000, L&H reported approximately
    $175 million in sales revenue from its Korean operations --
    L&H Korea.  The purported dramatic growth in sales from its
    Korean subsidiary accompanied the inflation of the price of
    L&H stock.  The majority of this revenue was fraudulent.

    L&H Korea engaged in "sales" subject to written and oral
    side agreements that did not appear in the L&H Korea
    contract files.  These terms included, in some instances,
    agreements by L&H Korea not to pursue collection of license
    fees unless and until the "customer" generated sufficient
    revenue from use of the L&H software to cover those fees.

    To prevent uncollectible receivables from remaining on L&H
    Korea's books, thereby raising questions about the quality
    of the company's reported earnings, a series of transactions
    with four Korean banks were staged to give the impression
    that the receivables had been factored to those banks on a
    non-recourse basis.  In fact, L&H Korea entered into side
    agreements with the banks requiring L&H Korea to maintain
    blocked deposits to cover the amounts of the "factored"
    receivables, which the banks could apply to satisfy any
    collection shortfalls.  Thus, these transactions were
    essentially fully secured loans from the banks to L&H Korea,
    rather than sales of receivables from L&H Korea to the
    banks.

    In another scheme to disguise that its escalating accounts
    receivable did not reflect genuine sales, L&H Korea arranged
    to have third parties "purchase" the licensing agreements
    from the original customers.  The transferees would then
    obtain loans, collateralized by L&H Korea assets but not
    reflected in L&H Korea's books, and use the proceeds to pay
    L&H Korea through the original customers.  By this means,
    L&H Korea was, in effect, paying down its own receivables,
    while creating the appearance of successfully collecting
    payments from customers.

(4) Subsequent Events

    During the last quarter of 2000, as information about the
    company's financial fraud became public through the press,
    the price of Lernout & Hauspie stock declined dramatically,
    falling from a high of $72.50 in March 2000 to $.76 on
    December 29, 2000.  On December 6, 2000, the common stock
    of Lernout & Hauspie was de-listed by Nasdaq.  Thereafter,
    Lernout & Hauspie voluntarily de-listed from Nasdaq Europe
    in March 2001.  Lernout & Hauspie common stock is currently
    quoted on the "Pink Sheets" disseminated by Pink Sheets LLC.

According to the Commission's complaint, L&H's conduct violated
the anti-fraud, reporting, books and records and internal
controls provisions of the federal securities laws: Section
17(a) of the Securities Act of 1933 and Sections 10(b), 13(a),
13(b)(2)(A), and 13(b)(2)(B) of the Securities Act of 1934 and
Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13a-16 thereunder.  The
Commission seeks a permanent injunction against future
violations by Lernout & Hauspie of these provisions of the
federal securities laws.

The Commission acknowledges the assistance of the United States
Attorney for the Southern District of New York; the Belgian
Ministry of Justice (pursuant to the provisions of the Mutual
Legal Assistance Treaty in effect between the United States and
Belgium); and the Jersey Attorney General.

The Commission's investigation is continuing with respect to
other persons and entities.

                           *     *     *

The Boston Globe reported that the filing of the SEC lawsuit
surprised L&H.  Therese Pritchard, a Washington attorney
representing L&H, told the Boston Globe that, "The company and
SEC staff had reached an agreement on a resolution.  The company
is only waiting for the Belgian bankruptcy court to give final
authority to the curator to execute the papers, and a hearing on
that matter was already scheduled for the end of the month."
Ms. Pritchard declined to comment further.  The SEC is also
silent on the alleged settlement. (L&H/Dictaphone Bankruptcy
News, Issue No. 31; Bankruptcy Creditors' Service, Inc.,
609/392-0900)


===========
F R A N C E
===========


ALCATEL: European Space Agency Awards Alcatel the Amerhis System
----------------------------------------------------------------
The European Space Agency (ESA) has awarded Alcatel Espacio, a
Spanish subsidiary of Alcatel Space, as the main contractor, and
its industrial consortium, the development and turnkey delivery
of the Broadband Interactive Multimedia Communications System by
Satellite, called AMERHIS, which will be on board the Amazonas
satellite from Hispasat. The system is planned to be delivered by
mid 2004. The value of the system is 56 millions Euros of which
ESA's contribution is 28 millions Euros.

AMERHIS is the first in the worldwide communications industry to
offer bi-directional communications through satellite. Thanks to
this, the operator Hispasat will be able to offer more and better
services to its customers in an autonomous way like high-speed
Internet, MPEG-based services, video and radio on demand and
interconnection with the different terrestrial communication
networks, controlling its capacity more efficiently.

The system core is based on a digital processor that provides a
compatible interface with the new open standard DVB-RCS (Digital
Video Broadcasting-Return Channel Satellite) for the return
channel through satellite and the DVB-S consolidated standard for
down link. The use of the standard DVB-RCS/DVB-S makes the supply
of equipment from different manufacturers possible, which results
in the competitive provision of services and equipment. The
design of this advanced system has been facilitated thanks to
activities funded by the European Union within the IST programme
(IBIS Project) and will be validated by using tools that have
been developed in close cooperation (since 2000) between Alcatel
Space and CNES.

The basic configuration of the AMERHIS system includes a network
management center responsible for the management of the resources
on board, four access gateways to provide the system access to
the terrestrial network and user terminals, all of them oriented
to the commercial offering of new services.

This ambitious project will mark a new era in communication
satellites thanks to the ESA initiative, well supported by the
Spanish Center of the Industrial and Technological Development
(CDTI) and funded according to the ARTES rules.

The multinational consortium lead by Alcatel Espacio includes
Alcatel Space from France, Mier Comunicaciones and Indra Espacio
from Spain, EMS Technologies from Canada and Nera from Norway.
All of them being companies with a long experience, recognition
and technical knowledge that will guarantee the success of the
project.

About Alcatel Espacio
Alcatel Espacio is currently working on TTC & Data Transmission,
Passive Microwave and Digital Processing on board equipment in
the main world-wide space programs, with presence in both of the
Telecommunications, Navigation, Earth Observation, Science, Space
Infrastructure Missions, where it holds the leadership as
European supplier for S-Band TTC Transponders.
About Alcatel Space
Alcatel Space ranks among the world's leading space systems prime
contractors. Leveraging its dual expertise in civil and military
applications, Alcatel Space develops satellite technology
solutions for telecommunications, navigation, optical and radar
observation, meteorology, and scientific applications. The
company is also Europe's number one prime contractor for Earth
observation, meteorology and navigation ground segments, as well
as space systems operations. A fully-owned subsidiary of Alcatel
(100%), Alcatel Space generated 2001 revenues of 1.4 billion
Euros. For more information, please visit our website at:
www.alcatel.com/space

About Alcatel
Alcatel designs, develops and builds innovative and competitive
communications networks, enabling carriers, service providers and
enterprises to deliver any type of content, such as voice, data
and multimedia, to any type of consumer, anywhere in the world.
Relying on its leading and comprehensive products and solutions
portfolio, stretching from end-to-end optical infrastructures,
fixed and mobile networks to broadband access, Alcatel's
customers can focus on optimizing their service offerings and
revenue streams. With sales of EURO 25 billion in 2001, Alcatel
operates in more than 130 countries.


ALCATEL: Provides Wireless Location Solutions With SnapTrack
------------------------------------------------------------
Alcatel (Paris: CGEP.PA and NYSE: ALA) and SnapTrack, Inc., a
wholly-owned subsidiary of QUALCOMM Incorporated (Nasdaq: QCOM),
today announced an agreement to incorporate SnapTrack's
SnapSmartT Assisted Global Positioning System (A-GPS) wireless
location server software into Alcatel's Intelligent Networks
products for location-enabling GSM networks. The dynamic
flexibility of SnapSmart, combined with Alcatel's leading open
architecture design, provides the GSM industry with an interface-
neutral, dependable, private and easily integrated wireless
location system and makes SnapTrack's A-GPS technology available
to GSM carriers.

The companies will work together to integrate SnapTrack's
SnapSmart A-GPS location server software into Alcatel's A-GPS
Positioning Server for second-generation (2G) GSM networks, with
a clear migration path to Serving Mobile Location Centers (SMLCs)
for third-generation (3G). Alcatel's A-GPS Positioning Server
product, when deployed with Alcatel's existing Gateway Mobile
Location Center (GMLC) and with A-GPS-enabled handsets such as
those using QUALCOMM's MGP6200T multimode A-GPS companion chip,
will enable GSM operators to provide their wireless customers
with the most advanced and efficient location-based mobile
communication services on the market.

"Carriers are increasingly interested in staying ahead of the
technology curve and deploying technology in a cost-effective way
to take advantage of new revenue opportunities. IDC, a leading
industry analyst firm, expects that carriers will appreciate the
potential of this product alliance," said Richard Dean, program
director for IDC's Wireless and Mobile Infrastructure Services
research program. "Alcatel is increasing its efforts to develop a
presence in another vertical category, this time in wireless
location based services. SnapTrack's A-GPS software presents new
possibilities for Alcatel to increase its product capabilities,
while helping carrier customers achieve their own business
objectives."

This partnership completes Alcatel's location-based services
offerings. Designed as a forward-compatible solution for 2G and
3G networks, Alcatel's GMLC location server supports different
positioning technologies: network centric Cell-ID technology with
a precision between 500m and 2 km; terminal centric SIM-Toolkit
technology, which is based on enhanced signal strength reach; and
high accuracy A-GPS-based positioning technology. With the
addition of SnapTrack's technology, Alcatel further enriches the
precision location capabilities of wireless service providers -
the same providers that acknowledge Alcatel's leadership in radio
and Intelligent Networking calculation.

"We're very pleased to be teaming with Alcatel, a leader in
Intelligent Networks products. This relationship fulfills a key
component of our end-to-end wireless location offering for GSM
and other asynchronous network operators," said Bret Sewell,
president of SnapTrack. "When combined with QUALCOMM's MGP6200T
multimode A-GPS companion chip and QUALCOMM'S A-GPS-enabled
multimode MSM wireless modems, the products that result from this
agreement, will enable a range of high-precision location-based
services for wireless operators while providing a distinct
advantage over their competition."

"High-precision location has strong potential to increase
revenues from current location-based service offerings, as well
as to expand the range of possible applications," said Mark
Peterson, vice president of product management and marketing for
Alcatel. "Operators will benefit from our reliable, standards-
based high-precision wireless location solution."

About SnapTrack
Headquartered in Campbell, California, SnapTrack pioneered
Wireless Assisted GPST and owns patents that are fundamental to
the cost-effective deployment of Wireless Assisted GPS-based
location systems. SnapTrack's Hybrid Wireless Assisted GPS system
enhances QUALCOMM's gpsOne location solution and MSM position-
enabled chipsets offer anytime, anywhere, accurate, high-speed
location of a wireless caller, even inside buildings where
conventional GPS does not operate. The Company's Wireless
Assisted GPS products support standards-based implementations on
synchronous and asynchronous networks and include the SnapSmart
location server software system, the SnapCoreT multi-mode GPS
solution and the SnapWARNT GPS reference data feed service. For
more information, please visit http://www.snaptrack.com.

About QUALCOMM
QUALCOMM Incorporated (www.qualcomm.com) is a leader in
developing and delivering innovative digital wireless
communications products and services based on the Company's CDMA
digital technology. Headquartered in San Diego, Calif., QUALCOMM
is included in the S&P 500 Index and traded on The Nasdaq Stock
Market under the ticker symbol QCOM.
QUALCOMM, OmniTRACS, OmniExpress and Eudora are registered
trademarks of QUALCOMM Incorporated. gpsOne, MGP6200 and MSM are
trademarks of QUALCOMM Incorporated. Wireless Assisted Global
Positioning System, SnapCore, SnapSmart and SnapWARN are
trademarks of SnapTrack, Inc. All other trademarks are the
property of their respective owners.

About Alcatel
Alcatel designs, develops and builds innovative and competitive
communications networks, enabling carriers, service providers and
enterprises to deliver any type of content, such as voice, data
and multimedia, to any type of consumer, anywhere in the world.
Relying on its leading and comprehensive products and solutions
portfolio, stretching from end-to-end optical infrastructures,
fixed and mobile networks to broadband access, Alcatel's
customers can focus on optimizing their service offerings and
revenue streams. With sales of EURO 25 billion in 2001, Alcatel
operates in more than 130 countries.


VIVENDI UNIVERSAL: Creditors Extends US$1.62 BB Credit Facility
---------------------------------------------------------------
Vivendi Universal Entertainment (VUE), a subsidiary of Vivendi
Universal (VU) (NYSE: V; Paris Bourse: EX FP) has received
commitments from its existing lenders, JPMorgan Chase Bank and
Bank of America, N.A., to extend its $1.62 billion credit
facility from November 1, 2002, to June 30, 2003, subject to
customary closing conditions.

With this extension (and the waivers noted below), VU has met the
last significant requirement for drawing down its new Euro 3
billion credit facility, which is scheduled to close November 1,
2002.

The original short-term credit facility was set in place by VUE
in May 2002 as part of VU's acquisition of the entertainment
assets of USA Networks Inc.

During the extended term, VUE intends to replace the facility
with permanent financing. To the extent that VUE attains a
certain level of permanent refinancing by June 30, 2003, the
maturity of the remaining balance under the credit agreement may
be extended until September 30, 2003.

Separately, VU has obtained waivers from the financial
institutions participating in the existing loans of Euro 3
billion (95% acceptance rate) and Euro 850 million (89%
acceptance rate) and bilateral credit lines, enabling the new
Euro 3 billion facility to be set up.

CONTACT:  Vivendi Universal
          Media:
          Paris
          Antoine Lefort, +33 1 71 71 11 80
          Alain Delrieu, +33 (1) 71 71 1086
            or
          New York
          Anita Larsen, +(1) 212/572-1118
          Mia Carbonell, +(1) 212/572-7556


VIVENDI UNIVERSAL: Plans to Issue Bonds Backed by Ticket Sales
--------------------------------------------------------------
Vivendi Universal, the media company raising cash to trim down
debts, plans to sell US$1 billion of bonds backed by ticket sales
from its Universal movie unit, says Bloomberg. The report
gathered the information from people familiar to the plans.

The sale is aimed at helping the company reduce its US$1.6
billion loan that is due to expire November. Creditor banks J.P.
Morgan Chase & Co. and Bank of America Corp reportedly agreed
Tuesday to extend the deadline to June 30.

Money managers, however, say that such deal would require "extra
work" on the part of potential investors, as bonds backed by
revenue from movie ticket sales are unusual.

On the part of Vivendi, Michael Hoeh of Dreyfus Corp. said, the
company may have to offer higher yields to attract buyers, adding
that it may have to ofer a yield higher than Ford Motor Credit
Co. notes. The notes are currently 9 percent over 10 years,
according to Hoeh.

The idea of the bond offering came after Dreamworks SKG's sale of
US$325 million bonds backed by future revenue from its live
action films.

Both Vivendi and Dreamworks were not able to make a comment on
the matter.


VIVENDI UNIVERSAL: BT Sells Cegetel Stake for GBP2.5 Billion
------------------------------------------------------------
BT announced that it has agreed to sell its 26 per cent stake in
Cegetel Groupe SA to Vodafone for ?4.0 billion (o2.5 billion) in
cash.

Sir Christopher Bland, BT's chairman, said: "This is an excellent
transaction for BT's shareholders. The price represents a return
of around two and a half times our total investment in Cegetel.

"This sale is a further significant step in the de-leveraging
strategy laid out at the time of our rights issue last year. We
are now close to realising our o10 billion net debt target,
giving BT one of the strongest balance sheets in the sector. This
allows BT to focus on driving our core activities forward."

BT will recognise a profit of approximately o1.4 billion on
completion of the transaction. The transaction is conditional
upon relevant regulatory approvals and is expected to complete
before the end of 2002. BT was advised by Rothschild in respect
of this transaction.

Cegetel/SFR

Cegetel is the number one alternative fixed line operator in
France and holds an 80 per cent interest in SFR, France's number
two mobile operator. BT acquired its 26 per cent stake in Cegetel
in 1997, and in total has invested o1.0bn to date. BT's stake in
Cegetel is carried at about o180 million in BT's balance sheet
and, for the year ending March 31, 2002, BT's share of the
profits attributable to its investment in Cegetel was o78 million
after tax and minority interests. After accounting for goodwill
of o0.9 billion previously charged to reserves, BT will recognise
a profit on the sale of o1.4 billion.

The stand-still agreement which prevented an earlier disposal of
BT's stake in Cegetel expired on September 24, 2002.

SFR is the second largest mobile operator in France with in
excess of 12.6 million subscribers and a 34.5 per cent market
share at the end of June 2002. Cegetel holds 80 per cent of SFR,
with the remaining 20 per cent held by Vodafone.

Note:

Vivendi Universal, the French media group which had sought to
increase its 44%-stake in Cegetel, had earlier considered to
offer BT Group and SBC Communications cash payments in two stages
for their stakes in Cegetel.

The telecommunications company offered both BT and SBC, a bid
similar to the EUR12.4 billion tendered by Vodafone Group.

Vivendi had aimed to increase its stake in Cegetel to above 50%
in order to consolidate the group's strong cashflows.

CONTACT:  BT Group Newsroom
          Phone: 020 7356 5369
          From outside the U.K., dial: +44 20 7356 5369
          Home Page: http://www.btplc.com/mediacentre

          VIVENDI UNIVERSAL
          42 Avenue de Friedland
          75380 Paris Cedex 08, France
          Phone: +33-(0)1-71-71-10-00
          Fax: +33-(0)1-71-71-11-79
          Home Page:  http://www.vivendiuniversal.com


VIVENDI UNIVERSAL: Sells Shares in U.K. Holdings
------------------------------------------------
Vivendi Environnement SA, a unit of struggling French media
behemoth Vivendi Universal, recently sold its 31.4% share in
U.K.'s South Staffordshire Group, says Bloomberg.

The water utility unit netted GBP84.7 million in the sale and
placed 19.7 million shares with eleven financial institutions at
a price of 430 pence a share, said South Staffordshire
spokeswoman Kate Pope.

This recent sale is just one of many divestments being undertaken
by the group to improve its liquidity position.  Recently, parent
company Vivendi Universal said it may put its U.S. entertainment
assets in a future stock offering in order to attract new
American investors.

Vice Chairman Edgar Bronfman, Jr. was recently quoted by the Los
Angeles Times admitting the likelihood of an initial public
offering -- a move long speculated by observers.  This
transaction will not happen any time soon, though, because of the
low valuations of media companies, which include moviemaker
Universal Studios.

Vivendi is aiming to raise EUR12 billion from asset sales over
the next 18 months in order to reduce debts.  S&P, the rating
agency had earlier said the disposals of Telepiu and Canal+
Technologies did not help much in easing the group's tight
liquidity position.


=============
G E R M A N Y
=============


COMMERZBANK AG: Convertible Bonds Chief Resigns; Reason Unclear
---------------------------------------------------------------
Commerzbank AG, Germany's fourth-largest bank, lost Rajan
Russell, its global head of convertible bonds, who reportedly
resigned Monday, says Bloomberg.

Commerzbank Spokesman Neil Brazil confirmed the resignation, but
did not reveal the reason for Mr. Russell's departure and or
whether a replacement had already been found.

The bank has already eliminated 190 jobs in its investment
banking division amid sagging earnings caused by the slumping
stock markets.  The last time Commerzbank led a convertible bond
sale was in November 2001, when it helped raise EUR150 million
for video game producer UBI Soft Entertainment SA, Bloomberg
says.

In all Commerzbank plans to undertake hundreds of corporate
banking job cuts, on top of the 4,300 workforce reduction
scheduled for 2003 after deciding to review its corporate
activities.  The redundancies are to affect employees in Germany
and London.

In July, TCR-Europe reported that Commerzbank is hoping to save
EUR50 million in its private-clients business by cutting jobs and
working hours as outlined in a new redundancy plan.

The strategy of the bank, which posted losses of EUR185 million
in 2001, is aimed at bringing down group-wide costs from the 2001
level of EUR5.86 billion back to the 2000 level of EUR5.5
billion.

Mr. Russell joined Commerzbank in May 2000 to help build its
convertible bond business as part of the bank's effort to win
more investment banking business.


CONSORS DISCOUNT: Gives Up Swiss Unit for Undisclosed Amount
------------------------------------------------------------
ConSors Discount Broker AG informed the Frankfurt Stock Exchange
Tuesday that it had shipped its Swiss unit to Swissquote Bank for
an undisclosed sum, as it tries to boost earnings by focusing on
its home market.

Already conceding that it will have a negative result this year,
the company is training its efforts on cutting costs to contain
its losses.  The company has been operating in Switzerland since
1999 and has some 11,000 active users in that country, says
Bloomberg, citing the Web site of ConSors (Schweiz) AG.

In September, the company announced plans to fire more than half
of its employees at its capital markets unit and close its
Frankfurt-based investment bank.

BNP Paribas SA now controls ConSors, after buying the company in
May for EUR485 million from Germany's troubled Schmidtbank.
Shortly after the takeover, Consors revealed an EUR160 million
interim loss and predicted a full-year deficit.  The company also
wrote-off EUR121 million of exceptional items in the first half,
which analysts saw as clearing the balance sheet ahead of its
integration with BNP's Cortal brokerage.

In its first half report, Consors disclosed that trading fell 40%
to 2.6 million transactions in the first half to June 30, with
most of the fall in the second quarter.  Net commission income
also fell 40% to EUR44 million from EUR73 million.  Net interest
income fell 16% to EUR20.5 million from EUR17.2 million.

Consors operates in Italy, Switzerland and Spain as well as
France and Germany.  BNP hopes to reach synergies of EUR53
million a year from CortalConsors by 2005 and raise assets under
management from EUR14 billion to EUR25 billion by 2005.


MOBILCOM AG: Obtains Extension for UMTS Loan Refinancing
--------------------------------------------------------
MobilCom AG and the banking consortium under the guidance of ABN
Amro Bank, Deutsche Bank AG London, Soci,t, G,n,rale, and Merrill
Lynch have agreed to a further extension agreement for the
refinancing of the UMTS loans amounting to Euro 4.7 billion due
by October 14, 2002. Like the second extension agreement, among
others, this agreement is subject to the condition subsequent
that a Memorandum of Understanding concerning a long-term
financing solution between France Telecom and the banking
consortium remains effective. Hence, the UMTS loan (Senior
Interim Facility) falls due by October 31, 2002. Furthermore it
has been agreed that the interest payment is deferred until this
date as well.

Note:
On October 10, TCR-Europe reported that Mobilcom agreed with
lending banks to extend an agreement for the refinancing of the
UMTS loans amounting to EUR4.7 billion due by September 30, 2002.
The UMTS loan falls due by October 14, 2002.


MOBILCOM AG: Gov't Freezes Release of Rescue Package Balance
------------------------------------------------------------
The government won't lend more money to troubled cellular phone
service provider MobilCom AG unless France Telecom answers the
call to pay the German company's EUR6.9 billion debt.

Citing no one, Financial Times Deutschland says only EUR50
million have so far been released out of the EUR400 million
rescue package pledged to the ailing company.  The balance will
not be released until the government has had a chance to examine
the firm's books.

MobilCom founder and ex-Chief Executive Gerhard Schmid is
reportedly in talks with German Economics Minister Werner Mueller
to try and speed the rescue process.  Mr. Schmid believes
MobilCom will go bust before France Telecom pays the debt without
further state aid.

Banks including Merrill Lynch & Co., Deutsche Bank AG and Societe
Generale yesterday pushed the deadline for a EUR4.7 billion
MobilCom loan back to the end of this month.  France Telecom,
which abandoned MobilCom last month amid difficulties reducing
its own EUR69.7 billion in debt, is now in talks with the German
company to pay the loan it had guaranteed.


CONTACT:  MOBILCOM AG
          Hollerstra e 126
          D-24782 B�delsdorf, Germany
          Phone: +49-43-31-69-11-73
          Fax: +49-43-31-69-28-88
          Home Page: http://www.mobilcom.de


MOBILCOM AG: Introduces Bonus Program for MobilCom Xtra Customers
-----------------------------------------------------------------
Dial "M" for money: MobilCom Xtra customers earn cold cash with
the latest rate option, XtraClever, for the rates XtraGo, XtraOne
and XtraPlus - provided that someone calls you. In the future,
MobilCom Xtra customers will receive a bonus for every call
received on the T-D1 network from the national landline network,
from a T-D1 connection, from a national connection from another
provider and from abroad.

For every call received as described above, MobilCom Xtra
customers will be paid one cent for each full minute (60/60) of
the call's duration on their XtraClever account. As soon as the
total reaches 50 cents, it will be credited to the Xtra account
and can be used for phoning. The customers will receive an SMS
when the account is credited. Naturally they can also find out
about their account balance by calling XtraCode *144 #.

No bonus will be given for calls that go to the mailbox and for
fax/data connections. Nor will it be paid on calls made to other
people. Customers do not have a right to partial sums or to
payment in cash. The promotion ends on March 13, 2003.


=============
I R E L A N D
=============


ELAN CORPORATION: Announces Webcast of Financial Results
--------------------------------------------------------
Elan Corporation, plc (NYSE: ELN) announced that it will report
third quarter 2002 financial results on Wednesday, October 30,
2002, before the financial markets open.

The announcement will be followed by a conference call at 8:00
a.m. Eastern Time with the investment community.

Live audio of the conference call will be simultaneously
broadcast over the Internet and will be available to investors,
members of the news media and the general public.

This event can be accessed by visiting Elan's website at
www.elan.com and clicking on the Investor Relations section, then
on the event icon. The event will be archived and available for
replay for 48 hours after the call. The replay telephone number
is 800-633-8284 or 402-977-9140, reservation number 20968652.

Elan is focused on the discovery, development, manufacturing,
selling and marketing of novel therapeutic products in neurology,
pain management and autoimmune diseases. Elan shares trade on the
New York, London and Dublin Stock Exchanges.

Note:

Elan's market value has plummeted this year, from USD15.17
billion at the start of 2002 to its current valuation of USD1.25
billion. The reduction is blamed on a probe by the Securities and
Exchange Commission, the failure of an experimental Alzheimer's
disease drug and cheaper competition for its best-selling
medicine.

    CONTACT: Elan Corporation
             Investors:  (U.S.)
             Jack Howarth, 212/407-5740
             800/252-3526
                or
             Investors:  (Europe)
             Emer Reynolds, 353-1-709-4000
             00800 28352600
                or
             Media:
             Sunny Uberoi, 212/332-4766


PARTHUS TECHNOLOGIES: Notifies Scheme of Arrangement Hearing
------------------------------------------------------------
Notice is given that a Petition was presented on September 27,
2002 to the High Court of Ireland for an Order pursuant to the
section 201 of the Companies Act 1963 sanctioning a Scheme of
Arrangement between Parthus Technologies PLC and its shareholders
and option holders.  The petition was also presented for an Order
pursuant to section 72 of the Companies Act confirming a
reduction of a capital forming part of the Scheme of Arrangement.

The Petition is directed to be heard before the High Court on
October 21, 2002.  Any member, option holder or other creditor of
the company who wishes to support or oppose the making of any
Order on the Petition may appear at the time of hearing by
himself of his Solicitor or Counsel for the purpose and a copy of
the Petition will be furnished to any member or creditor of the
said company who requires it to be understood.

L.K. Shields Solicitors
Solicitors for the Petitioners
39/40 Upper Mount Street, Dublin 2

Note:  Any person who intends to appear at the hearing of the
Petition must serve or send by post to the above-named Petitioner
at its Solicitors, notice in writing of his intention to do so.
The notice must state the name and address of the firm and must
be signed by the person or the firm, or his or their solicitor
and must be served or, if posted must be sent by post in
sufficient time to reach the above named solicitor of the
Petitioner not later than 5:00 pm on October 18, 2002.


=========
I T A L Y
=========


FIAT SPA: Cooking One Big Sale Before Year's End to Cut Debts
-------------------------------------------------------------
Struggling industrial group Fiat SpA is reportedly planning to
sell a big chunk of its business before 2003 rolls in, the
Financial Times said recently.

Citing unidentified sources familiar with the plan, the paper
said production-line equipment maker Comau SpA is allegedly
heading the pack of units that are being lined up to fill the
company's need for cash to pare down debts.  The report says
there are three bidders for Comau, which analysts estimate to be
worth EUR700 million.

Another unit possibly up for disposal within the year is the
Brazilian portion of Fiat's Fidis consumer car finance business.
The business could garner about EUR100 million from Brazilian
buyers, the paper said.

Fiat is facing its worst crisis in a decade as it plans to lay
off a fifth of its domestic autoworkers and close a factory in
Sicily.  It had previously announced a layoff plan that will send
some 8,000 workers packing for home.

The Company reported a second-quarter net loss of EUR34 million.
Fiat Auto, its loss-making unit had an operating loss of EUR394
million and cash outflow of EUR700 million.  Fiat Auto recorded
an operating loss of EUR823 million in the first half.


=====================
N E T H E R L A N D S
=====================


VERSATEL TELECOM: Court Confirms First Amended Reorg. Plan
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
confirmed Versatel Telecom International N.V.'s First Amended
Plan of Reorganization.  The Court determined that the Plan
complies with the applicable provisions of the Bankruptcy Code.

The Court determines confirmation of the Plan is not likely to be
followed by liquidation or the need for further financial
reorganization of the Debtors. The Plan presents a workable
scheme of reorganization and there is a reasonable probability
that the provisions of the Plan will be performed.  The Court
provides that if the Effective Date will not occur on or before
January 4, 2003, the Confirmation shall be vacated and no
distribution under the Plan shall be made.

After the Effective Date, the Reorganized Debtor will convene an
extraordinary meeting of the shareholders at which the new
supervisory board will be appointed. Four directors of the
supervisory board are to be designated by the Ad Hoc Committee
and no more than three directors of the supervisory board are to
be designated by the Reorganized Debtor. The Court ascertains
that the selection of members of the supervisory board is
consistent with the interests of creditors and equity security
holders and with public policy.  On the Effective Date, New
Common Stock will be issued to the Debtor's Noteholders such
that, in the aggregate, the Noteholders will acquire control of
80% of the equity of the Reorganized Debtor.

Versatel Telecom International, N.V. provides broadband Internet
and telecommunications services including voice and data
services, dedicated Internet access services, customized
telecommunication solutions and Internet-enabled applications in
The Netherlands, Belgium and northwest Germany. The Debtor filed
for chapter 11 protection on June 19, 2002. Douglas P. Bartner,
Esq. at Shearman & Sterling represents the Debtor in its
restructuring efforts. When the Company filed for protection from
its creditors, it listed $2,017,758,399 in total assets and
$1,605,897,821 in total debts.


===========
P O L A N D
===========


NETIA HOLDINGS: Nasdaq Delists American Depository Shares
------------------------------------------------------------
Netia Holdings S.A. ("Netia") (WSE:NET), Poland's largest
alternative provider of fixed-line telecommunications services
(in terms of value of generated revenues), announced that the
Nasdaq Listing Qualifications Panel decided to de-list Netia's
American Depositary Shares ("ADSs") from The Nasdaq Stock Market,
effective as of the opening of the business on Oct. 15, 2002.
Netia is considering requesting the review of this decision by
the Nasdaq Listing and Hearing Review Council.

In its decision, dated Oct. 14, 2002, the Nasdaq Listing
Qualifications Panel determined that the continued listing was no
longer appropriate due to the substantial period of time during
which Netia has failed to comply with the minimum net tangible
assets/shareholders' equity requirement and the ongoing
restructuring proceedings. The Nasdaq Listing Qualifications
Panel also invited Netia to reapply for listing on The Nasdaq
Stock Market subject to compliance with the initial listing
standards upon completion of the restructuring. Starting Oct. 15,
2002, Netia's ADSs are eligible to trade over-the-counter.

Wojciech Madalski, Netia's President and Chief Executive Officer,
commented: "Factors surrounding the ongoing debt restructuring
were largely the cause of Netia's non-compliance with Nasdaq
requirements for continued listing. Post restructuring, Netia
will possess a healthy balance sheet and available capital
resources to pursue its strategic objectives. Netia's ordinary
shares will continue to trade on the Warsaw Stock Exchange, the
company's home/primary market."

CONTACT: Netia
         IR
         Anna Kuchnio, +48-22-330-2061
         or
         Media
         Jolanta Ciesielska, +48-22-330-2407
         or
         Taylor Rafferty, London
         Alexandra Jones, +44-(0)20-7936-0400
         or
         Taylor Rafferty, New York
         Jeff Zelkowitz, 212/889-4350


NETIA HOLDINGS: Introduces New Tariff Plans for Services
--------------------------------------------------------
Netia Holdings S.A. (WSE: NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), on Tuesday announced the
introduction of new tariff plans, billed on a per-second basis,
for analogue and ISDN Duo services, to supplement its current
tariff offerings.

As of October 15, 2002, customers using ISDN Multi service within
the existing "Effective" tariff plan will also be able to choose
this package to settle their bills for the analog and ISDN Duo
connections, with the following fractions of traffic billed on a
per-second basis:


-  Local call charge of PLN 0.10 per minute (net of VAT);
-  Unified long-distance call charge of PLN 0.31 per minute (net
of VAT);
-  Unified fixed-to-mobile call charge of PLN 1.20 per minute
(net of VAT);
-  International call charge of PLN 1.42, 1.60, 3.20 and 5.70 per
minute (net of VAT), depending on the country zone; and
-  International voice-over-IP call charge of PLN 1.15, 2.25 and
4.05 per minute (net of VAT), depending on the country zone.

The call connection fee in the "Effective" package is PLN 0.10
(net of VAT). The monthly subscription fee in the "Effective"
package is PLN 700 (net of VAT) for ISDN Multi, PLN 45 (Net of
VAT) for analog and PLN 51 (net of VAT) for ISDN Duo lines. All
other charges are consistent with the "Chatty" and "Versatile"
tariff plans for analog and ISDN Duo, respectively.

Further details of the tariff plans are available on request from
Netia.

Note:

Netia, battered by a stagnant market, regulatory issues and
rising debt, defaulted on US$850 million in bonds in January.
Under the restructuring plan, bondholders will gain ownership of
91% of the company through a share issue.

CONTACT:  Netia
          IR:
          Anna Kuchnio, +48-22-330-2061
          Media:
          Jolanta Ciesielska, +48-22-330-2407
               or
          Taylor Rafferty, London
          Alexandra Jones, +44-(0)20-7936-0400
               or
          Taylor Rafferty, New York
          Jeff Zelkowitz, 212/889-4350


===========
R U S S I A
===========


MDM BANK: Goes Up Moody's Rating Ladder to "B-" From "CCC+"
-----------------------------------------------------------
Standard & Poor's raised Monday the long-term rating of MDM Bank
to "B-" from "CCC+", but remained cautious about the bank's
future due to the institutional weakness of Russia's banking
sector.

In addition, the rating agency also noted the potential risks
inherent in the expansion strategy of MDM Financial Group, the
umbrella organization of which MDM Bank is the lead operating
entity.

Since 2001, MDM Financial Group has acquired controlling stakes
in eight Russian banks and one Latvian bank.  The largest Russian
banks in the group, apart from the flagship MDM Bank, are
Petrovsky Narodniy Bank and Inkasbank in St. Petersburg, and
Conversbank in Moscow.  At June 30, 2002, MDM Financial Group had
capital of $330 million, consolidated assets of $2.33 billion,
and 5,500 employees.

"In the short term, the planned integration of the newly acquired
banks into a single network poses challenges in terms of
operational, personnel, and systems integration. Moreover, the
banks purchased by MDM Financial Group may have hidden credit or
operational risks," said S&P credit analyst Ekaterina Trofimova.

Ms. Trofimova, however, said that expansion is not entirely a bad
proposition: "Regional expansion should provide MDM Bank with
greater critical mass, potential for economies of scale, and
better opportunities to cross-sell products throughout the group.
In general, an improved Russian economic environment during the
past three years has increased business opportunities for Russian
banks and reduced the extremely high credit risk linked to
corporate clients."

A major concern, though, is the group's single ownership by
Andrey Melnichenko, who also owns 50% of MDM Industrial Group, an
industrial holding of several equity stakes in coal, chemical,
and pipe manufacturing companies.

"Although MDM Financial Group benefits from its owner's
commercial connections, the concentration of ownership in one
individual leaves it vulnerable to a change in his fortunes or to
his departure," the S&P said.

In changing MDM Bank's long-term counterparty credit rating, S&P
noted the bank's improved market position.  S&P also affirmed the
bank's "C" short-term counterparty credit rating and gave the
bank a stable outlook.

MDM Bank is one of the leading commercial banks in the Russian
Federation.  At the end of 2000, MDM was the fifth largest bank
in Russia.


=====================
S W I T Z E R L A N D
=====================


ABB LTD: Announces Resignation Of Martin Ebner From Board
---------------------------------------------------------
Zurich, Switzerland, October 15, 2002 - ABB's Board of Directors
announced today that one of its members, Martin Ebner, has
resigned from the board with immediate effect.
ABB said Ebner cited personal reasons for his decision.

"I would like to thank Martin Ebner for his work on the Board of
Directors, and for his contribution to ABB," said ABB chairman
and CEO, J�rgen Dormann.

Ebner has been a member of the ABB board since 1999.

ABB (http://www.abb.com)is a leader in power and automation
technologies that enable utility and industry customers to
improve performance while lowering environmental impacts. The ABB
Group of companies operates in more than 100 countries and
employs about 150,000 people worldwide.


===========================
U N I T E D   K I N G D O M
===========================


ABBEY NATIONAL: Bank of Ireland Reveals Strategic Proposal
----------------------------------------------------------
Bank of Ireland believes it is in the interests of its
stockholders and the shareholders of Abbey National to provide
information on the detailed proposal it made to Abbey National
dated 18 September 2002

There is a compelling strategic and commercial rationale for the
combination of Bank of Ireland and Abbey National:

The complementary nature of both banks' activities in the areas
of retail banking, wholesale banking and bancassurance provides a
strong platform for the reinvigoration of Abbey National's
performance

Bank of Ireland has developed detailed plans for each of Abbey
National's principal business divisions aimed at improving their
operational performance, reducing risk and enhancing returns for
both sets of shareholders*

Abbey National's U.K. market position would be strengthened
through the combination with Bank of Ireland's successful
financial services business in the U.K.

The combination would create the 13th largest company in the FTSE
Index (based on the pro forma combined market capitalisation)

Synergies before tax from the combination are estimated at EUR
631 million (STG o400 million) (to be fully achieved by the end
of the fourth full year following completion)**:

Of this EUR 631 million (STG o400 million), EUR 379 million (STG
o240 million) is estimated to come from cost savings (of which
EUR 32 million (STG o20 million) arises from an estimated
reduction in the corporation tax costs currently incurred by
Abbey National), and EUR 252 million (STG o160 million) from net
revenue benefits

Bank of Ireland has identified further potential synergies that
it believes it could confirm given the opportunity to engage with
Abbey National

Bank of Ireland has a proven track record and the management
capabilities to implement its proposals. Bank of Ireland has
achieved over the past five financial years:

-average annual growth in alternative earnings per share (pre
exceptional items and goodwill) of 23%; and

-a total shareholder return which places it amongst the top 25
major European listed companies.

Bank of Ireland will continue to pursue its growth and
development strategy in the Irish market, where it has leading
market positions

Bank of Ireland's proposal to Abbey National of 18 September 2002
included indicative offer terms as follows:


Abbey National shareholders to receive between 90 and 95 New Bank
of Ireland shares for every 100 Abbey National shares they
hold***; and

-in addition, around 130p in cash for each Abbey National share.

These indicative terms resulted in a value of 770p to 805p for
each Abbey National share, implying a premium of 18% to 24%
(based on Bank of Ireland's and Abbey National's closing share
prices on 17 September 2002) and 678p to 708p, implying a premium
of 10% to 15% (based on the closing share prices on 14 October
2002)****

The terms proposed are based on a sharing of the benefits of the
transaction between both sets of shareholders, with expected
earnings enhancement for Bank of Ireland stockholders in the
first full year following completion of the transaction*

The combined group would be led by Mike Soden as Chief Executive.
Management would be drawn from the best of both organisations
whilst maintaining a clear management structure. Bank of Ireland
has the strength and depth of management to contribute across all
of the businesses of the combined group

The head office of the combined group would be in Dublin. It
would have a primary listing on the London Stock Exchange, with
expected full inclusion in the FTSE 100, and would retain a
listing on the Irish Stock Exchange

Bank of Ireland's proposal to Abbey National is subject to,
amongst other matters, satisfactory due diligence. This is not a
waivable pre-condition. While Bank of Ireland expects to make an
offer to Abbey National's shareholders following satisfactory due
diligence, there can be no certainty that such an offer would be
made. If Bank of Ireland does proceed to make a formal offer, any
such offer will be subject to conditions, including the approvals
of the Central Bank of Ireland and the U.K. Financial Services
Authority

To date, Abbey National has been unwilling to engage in
discussions with Bank of Ireland. As Bank of Ireland would not be
prepared to make an offer to Abbey National shareholders without
the opportunity of carrying out due diligence, progress can only
be made with Abbey National's co-operation
Laurence Crowley, Governor of the Bank of Ireland, said today:

"We believe that our proposal would create significant value for
Bank of Ireland stockholders and would produce greater value for
Abbey National's shareholders than a standalone strategy. Bank of
Ireland has a strong commitment to stockholder value and will not
contemplate any action that would compromise that commitment. Our
management team has developed detailed business plans based on
sound commercial, strategic and operational principles, and on
the obvious strategic fit between the two groups.

I am confident that our management team has the skills and
experience to reinvigorate Abbey National's performance and
deliver substantial benefits from the combination. I am willing
to meet again with Lord Burns, Chairman of Abbey National, to
discuss how we might co-operate to explore this opportunity
further."

This summary should be read in the context of the full
announcement, including its Appendices.

*Before goodwill amortisation and restructuring charges. This
statement should not be construed as a profit forecast or be
interpreted to mean that the future earnings per share of the
combined group will necessarily be greater than the historic
published earnings per share of Bank of Ireland.

**The statements of estimated cost savings and net revenue
benefits (and resulting profit enhancement) should be read in
conjunction with Appendices I, II and III of this announcement.
For the reasons set out in those Appendices, there are inherent
risks in these forward looking estimates and the resulting cost
savings, net revenue benefits and profit enhancement may be
materially greater or less than those estimated in those
Appendices. No part of those statements or the statement relating
to earnings enhancement is intended to be a profit forecast and
no part of those statements or the statement relating to earnings
enhancement should be interpreted to mean that the earnings per
share of the combined group for the current or future financial
years will necessarily match or exceed the historical published
earnings per share of Bank of Ireland.

***On the assumption that Bank of Ireland stockholders receive
one New Bank of Ireland share for each unit of Bank of Ireland
stock.

****On the basis of closing prices for units of Bank of Ireland
stock of EUR 11.25 and Abbey National shares of o6.51 on 17
September 2002, the day before Bank of Ireland's letter to Abbey
National, and of EUR 9.60 and o6.18 respectively on 14 October
2002, the day prior to the issue of this announcement. The
relevant euro/Sterling exchange rates were o0.632 on 17 September
2002 and o0.634 on 14 October 2002.

Strategic proposal to Abbey National

Bank of Ireland refers to the statement made by Abbey National on
8 October 2002 rejecting its approach. Bank of Ireland believes
that it is in the interests of its own stockholders and the
shareholders of Abbey National to provide information on the
detailed proposal it made to Abbey National.

Bank of Ireland has considered in detail the benefits of a
combination of the two groups. From this, Bank of Ireland has
concluded that such a combination would achieve material synergy
benefits, currently estimated at EUR 631 million (STG o400
million)*, and would create significant value for both sets of
shareholders. Bank of Ireland's proposal to Abbey National
provided for:

-the creation of significant value for Bank of Ireland's
stockholders, enabling earnings enhancement in the first full
year following completion of the transaction**; and


-a sharing of the benefits of the transaction with Abbey National
shareholders in the form of their continuing interest in the
combined group and a cash payment.

An initial meeting was held between the Governor of the Bank of
Ireland and the Chairman of Abbey National on 18 September 2002.
Subsequent to this meeting, Bank of Ireland sent a detailed
proposal to Abbey National dated 18 September 2002, which Bank of
Ireland and its financial advisers believed formed the basis for
meaningful engagement between the parties. Bank of Ireland
proposed a meeting with Mike Soden, the Group Chief Executive of
Bank of Ireland, to enable Abbey National to give full
consideration to Bank of Ireland's plans. The offer of this
meeting was not taken up by Abbey National.

Bank of Ireland's proposal of 18 September 2002 to Abbey National
contained:

Bank of Ireland's view of the compelling strategic and commercial
rationale for the combination;
-a description of the proposed structure;

* The statements of estimated cost savings and net revenue
benefits (and resulting profit enhancement) should be read in
conjunction with Appendices I, II and III of this announcement.
For the reasons set out in those Appendices, there are inherent
risks in these forward looking estimates and the resulting cost
savings and net revenue benefits and profit enhancement may be
materially greater or less than those estimated in those
Appendices. No part of those statements is intended to be a
profit forecast and no part of those statements or the statement
relating to earnings enhancement should be interpreted to mean
that the earnings per share of the combined group for the current
or future financial years will necessarily match or exceed the
historical published earnings per share of Bank of Ireland.

** Before goodwill amortisation and restructuring charges. This
statement should not be construed as a profit forecast or be
interpreted to mean that the future earnings per share of the
combined group will necessarily be greater than the historic
published earnings per share of Bank of Ireland.

-an estimate of synergies that could be achieved; and

-indicative offer terms.
The indicative offer terms were as follows:

Abbey National shareholders to receive between 90 and 95 New Bank
of Ireland shares for every 100 Abbey National shares they hold*;
and

-in addition, around 130p in cash for each Abbey National share.
These indicative terms resulted in a value of 770p to 805p for
each Abbey National share, implying a premium of 18% to 24%
(based on Bank of Ireland's and Abbey National's closing share
prices on 17 September 2002) and 678p to 708p, implying a premium
of 10% to 15% (based on Bank of Ireland's and Abbey National's
closing share prices on 14 October 2002). **

The terms proposed are based on a sharing of the benefits of the
transaction between both sets of shareholders, with expected
earnings enhancement for Bank of Ireland stockholders in the
first full year following completion of the transaction***. The
cash component for Abbey National shareholders would be funded so
as to ensure an efficient capital structure for the combined
group, appropriate for its future business mix and strategy. This
is based on an initial target Tier 1 ratio of around 7% for the
combined group on completion, increasing over time as the actions
described for the businesses in this announcement take effect.

Bank of Ireland's proposal to Abbey National is subject to,
amongst other matters, satisfactory due diligence. This is not a
waivable pre-condition. While Bank of Ireland expects to make an
offer to Abbey National shareholders following satisfactory due
diligence, there can be no certainty that such an offer would be
made. If Bank of Ireland does proceed to make a formal offer, any
such offer will be subject to conditions, including the approvals
of the Central Bank of Ireland and the U.K. Financial Services
Authority.

Abbey National has, to date, been unwilling to engage in
discussions to explore this opportunity. As Bank of Ireland would
not be prepared to make an offer to Abbey National shareholders
without the opportunity of carrying out due diligence, progress
can only be made with Abbey National's co-operation.

* On the assumption that Bank of Ireland stockholders receive one
New Bank of Ireland share for each unit of Bank of Ireland stock.

** On the basis of closing prices for units of Bank of Ireland
stock of EUR 11.25 and Abbey National shares of o6.51 on 17
September 2002, the day before Bank of Ireland sent its letter to
Abbey National, and of EUR 9.60 and o6.18 respectively on 14
October 2002, the day prior to the issue of this announcement.
The relevant euro/Sterling exchange rates were o0.632 on 17
September 2002 and o0.634 on 14 October 2002.

*** Before goodwill amortisation and restructuring charges. This
statement should not be construed as a profit forecast or be
interpreted to mean that the future earnings per share of the
combined group will necessarily be greater than the historic
published earnings per share of Bank of Ireland.

Synergy benefits

The proposed combination of Bank of Ireland and Abbey National is
expected to give rise to significant opportunities for synergies,
arising from:

-integration of businesses and operations;
-rationalisation of overlapping activities;
-application of Bank of Ireland best practices and sales
management techniques; and
-restructuring of certain activities.

In total, Bank of Ireland estimates that, by the end of the
fourth full year following completion of the transaction, the
combination would lead to synergies before tax of EUR 631 million
(STG o400 million) per annum. Of this EUR 631 million (STG o400
million), EUR 252 million (STG o160 million) is estimated to come
from net revenue benefits and EUR 379 million (STG o240 million)
from cost savings (of which EUR 32 million (STG o20 million)
arises from an estimated reduction in the corporation tax costs
currently incurred by Abbey National).*

The table below shows the estimated cost savings and net revenue
benefits by business area:

                     Cost    Savings1   Net revenue  benefits
Total
                      ?m       om       ?m      om      ?m
om

Retail
                     178       113      207     131     385
244
Wholesale Banking
                      68        43       28      18      96
61
Life Assurance and Asset Management
                      33        21       17      11      50
32
Central              100        63        -     100      63
-
                    -----     -----   ------  ------  ------   --
----
                     379       240      252     160      631
400
                    ====       ====     ====    ====    ====
=====


1 Cost savings include tax synergies of EUR 27 million (STG o17
million) within Wholesale Banking and tax synergies of EUR 5
million (STG o3 million) within Life Assurance and Asset
Management. There are no tax synergies within Retail or Central.

The synergy estimates referred to in this announcement are based
on publicly available information. Bank of Ireland has identified
further potential synergies that it believes it could confirm if
given the opportunity to engage with Abbey National. The

* The statements of estimated cost savings and net revenue
benefits (and resulting profit enhancement) should be read in
conjunction with Appendices I, II and III of this announcement.
For the reasons set out in those Appendices, there are inherent
risks in these forward looking estimates and the resulting cost
savings and net revenue benefits and profit enhancement may be
materially greater or less than those estimated in those
Appendices. No part of those statements or the statement relating
to earnings enhancement is intended to be a profit forecast and
no part of those statements or the statement relating to earnings
enhancement should be interpreted to mean that the earnings per
share of the combined group for the current or future financial
years will necessarily match or exceed the historical published
earnings per share of Bank of Ireland.

-one-off cost of achieving the estimated synergies is expected to
be approximately EUR 559 million (STG o354 million).

Appendix I to this announcement sets out the bases of preparation
and assumptions on which the Directors' statement of the
estimated net revenue benefits and cost savings set out above
have been made.

Copies of letters from the Reporting Accountants,
PricewaterhouseCoopers, London, and Bank of Ireland's financial
advisers, Cazenove, IBI Corporate Finance and Schroder Salomon
Smith Barney concerning the Directors' statement are included in
Appendices II and III respectively.

Overview of strategic rationale

The strategic rationale for a combination of Bank of Ireland and
Abbey National is built on the following key factors:

it would create a significant, well diversified financial
services group with strong market positions in Ireland and the
U.K. and the potential to deliver attractive incremental value to
its shareholders;


Bank of Ireland and Abbey National have similar activities in the
areas of savings and mortgages, retail banking, bancassurance
distribution and wholesale banking. The respective product
capabilities and business profiles of the two groups should
provide a firm foundation for the integration and growth of the
combined group;

the Bank of Ireland and Abbey National brands are strong in
Ireland and the U.K. respectively with limited product overlap in
the U.K. Bank of Ireland believes that both brands would be able
to develop further their strong market positions without
diminution to their current powerful standing;

the combination would be expected to create significant synergies
both in terms of net revenue benefits, cost savings and tax
savings. Bank of Ireland has identified areas which offer
substantial potential for enhanced growth and value creation
across all of Abbey National's principal business divisions;

Bank of Ireland has a significant financial services business in
the U.K., which accounted for approximately a quarter of the
group's profit* in the last financial year and almost one third
of the group's assets. A combination of Abbey National's retail
business with Bank of Ireland's U.K. business would further
enhance Abbey National's strong U.K. position and bring an
additional customer base of approximately 2 million; and

the combination would create the 13th largest company in the FTSE
Index (based on the pro forma combined market capitalisation).
* Profit before tax and exceptional items excluding group and
central and including grossing-up for the year ended 31 March
2002. Bank of Ireland undertakes tax based transactions at rates
which are less than normal market rates in return for tax relief
arising from incentives for industrial developments and other
reliefs. To assist in making valid comparisons of pre-tax
performance the analysis of business unit performance is grossed-
up.

An analysis of Bank of Ireland's track record demonstrates a
proven management ability to achieve strong organic growth, to
acquire businesses, to maintain market-leading asset quality and
to deliver consistent returns to shareholders.

Integration plans

Bank of Ireland has developed detailed plans covering each of the
combined group's business areas: retail, wholesale, life
assurance and asset management and central services. These,
together with key areas of net revenue benefits and cost savings,
are summarised below.

Retail

The combined group would have major retail operations in the
Republic of Ireland and the U.K. The Bank of Ireland brand would
be used in Ireland and Abbey National would be the predominant
brand in the U.K.

Bank of Ireland believes that significant cost savings would
accrue from the integration of the combined businesses in the
U.K., through:

the rationalisation of the combined branch networks;


the integration of product manufacturing operations;


the integration of existing business banking operations; and


the rationalisation of the wealth management and internet
propositions of both groups.

In addition, Bank of Ireland believes that significantly
increased revenues could be generated by introducing Bank of
Ireland's approach to sales and relationship management and
enhancing the current Abbey National product propositions,
particularly in the following areas:

Business Banking - Abbey National has a small market share of the
SME market in the U.K. By comparison, Bank of Ireland has a
strong SME operation in Ireland with, for example, a 40% share of
business current accounts and a successful niche operation in the
SME market in Britain. Bank of Ireland believes that by
introducing its proven sales and relationship management model
into the Abbey National network, and by integrating the existing
complementary business operations in both groups, it could
capture a higher share of selected SME market segments.

Mortgages - Bank of Ireland believes that mortgage profitability
at Abbey National is under significant pressure from the
structural changes taking place in the market. Bank of Ireland
intends to manage mortgage profitability by offering a wider
range of products (including the non-standard mortgage products
of the U.K. Financial Services business) through Abbey National's
distribution channels, using a multi-brand approach (a
segmentation strategy successfully executed by leading players)
and by leveraging existing skills in intermediary distribution
and the re-mortgage segment.

Personal Banking - Abbey National has a significantly lower
cross-sale penetration rate of current accounts for personal
loans, credit cards and some general insurance products relative
to its U.K. peers. Bank of Ireland has a product cross-sales
ratio of 3.1 in the Irish market which is above U.K. industry
averages. Bank of Ireland believes that the sales management and
targeting practices employed in Ireland could be successfully
applied in the U.K. market.

Long-term Savings - Bank of Ireland and Bristol & West have been
successful at manufacturing and selling profitable guaranteed
long-term savings products to their customer bases - reflecting
the strong customer need for preservation of their capital in
volatile equity markets. Bank of Ireland believes that there is a
significant opportunity for increased sales of these products to
the Abbey National savings customer base.
Wholesale banking

Bank of Ireland believes that a significant restructuring and
refocusing of Abbey National's wholesale banking business would
be required. Bank of Ireland has built its successful wholesale
banking business over the past 30 years by providing a broad
range of value-added banking and risk management products and
services to a diverse corporate customer base, involving a wide
range of domestic and multi-national customer relationships. In
contrast, Abbey National has expanded its balance sheet by taking
on financial assets and investments, which have a limited direct
customer relationship.

Bank of Ireland would amalgamate the wholesale banking operations
of the two groups under the leadership of its management team. It
would dispose of a significant portion of the low-yielding assets
held by Abbey National and would also substantially reduce all
high-risk activities which are inconsistent with Bank of
Ireland's proven risk/reward and returns philosophy.

By focusing on higher value-added customer business, the combined
group would seek to achieve revenue benefits by:

leveraging the larger balance sheet of the combined group to lead
and arrange more transactions (principally senior debt) and
underwrite and hold larger positions arising from these
transactions; and

cross-selling Abbey National's structured product range to Bank
of Ireland's customer base.
Cost savings would also be envisaged from:

combining the treasury operations of the two groups; and

eliminating duplicate corporate banking function
Life assurance and asset management

Abbey National has built up its life operations through the
establishment of a bancassurance business and the acquisitions of
Scottish Mutual and Scottish Provident. It has recently announced
an agreement with Prudential plc relating to the distribution of
Prudential's with-profits bond.

The life industry in the U.K. is facing a number of strategic and
financial challenges. Falling equity markets have placed pressure
on life funds' solvency levels and new business volumes.
Regulatory developments and competitive factors have led to an
erosion of life assurance margins. The impact of these various
factors is apparent from the recent capital injection into, and
recent new business performance of, certain of Abbey National's
life businesses.

Bank of Ireland believes that Abbey National's customer base and
distribution network in the U.K. provide a major opportunity for
significant sales of long-term savings products. However, Bank of
Ireland does not believe that this opportunity has been fully
exploited by Abbey National to date.

More specifically, Bank of Ireland:

believes that the combination of its proven customer relationship
and sales management skills, and the enhanced product range
offered by a new distribution agreement, would lead to an
increase in product sales and reduce the capital commitment of
the combined group to its life operations. Bank of Ireland would
also consider extending, or entering into further, distribution
agreements to embrace additional or replacement products; and

would consider the rationalisation of the asset management
activities of Abbey National and Bank of Ireland Asset
Management.
In addition to the synergies which Bank of Ireland has
quantified, Bank of Ireland:

would explore opportunities in relation to an administration
agreement with a life assurance partner to outsource Abbey
National's processing and administration operations thereby
leading to greater efficiencies and cost savings; and

would review the strategic options for Scottish Mutual and
Scottish Provident. Scottish Mutual, in particular, faces
significant challenges in the current environment and Bank of
Ireland would regard the reduction in shareholders' capital
exposure to Scottish Mutual as a strategic priority. In this
regard, Bank of Ireland would also review the investment mix of
the with-profit funds of Scottish Mutual and Scottish Provident
to reduce the combined group's capital exposure.
Bank of Ireland believes that these proposals would result in an
improved competitive position for the combined group in the U.K.
long-term savings market and would produce cost and capital
efficiencies.

Central

Bank of Ireland believes that significant cost savings would
accrue from the amalgamation of certain of the central and head
office functions of the combined group, particularly in the
following areas:

integration of the two groups' head offices;

centralisation and further pursuit of procurement savings;

IT infrastructure rationalisation; and having a single shared
services function to support finance and HR activities.

Management and head office

The combined group would be led by Mike Soden as Chief Executive.
Bank of Ireland has indicated to Abbey National that other
management positions would be drawn from the best of both
organisations while maintaining a clear management structure.
Bank of Ireland has the strength and depth of management to
contribute across all of the businesses of the combined group.
The head office of the combined group would be in Dublin.

Transaction structure

Bank of Ireland has developed, in detail, a structure for
effecting an efficient combination of Bank of Ireland and Abbey
National. The combination would involve the creation of a new
Bank of Ireland holding company which would acquire Abbey
National. The new holding company would be constituted as a U.K.
plc with a listing on the London Stock Exchange and expected full
inclusion of the company's shares in the FTSE 100. A listing on
the Irish Stock Exchange would also be maintained. The structure
would seek to preserve the current tax position of both Irish and
U.K. resident shareholders.

Track record of Bank of Ireland

Bank of Ireland's track record demonstrates that it has the
necessary capabilities to address the strategic and commercial
challenges faced by Abbey National. Bank of Ireland has achieved
over the past five financial years:

average annual alternative earnings per share (pre-exceptional
items and goodwill) growth of 23%;


an average annual return on equity of 25%; and

a total shareholder return which places it amongst the top 25
major European listed companies.
Bank of Ireland has proven expertise across the spectrum of
retail and wholesale banking, life assurance and asset management
and believes these skills would be key to reinvigorating the
performance of Abbey National and extracting value for both sets
of shareholders from the combination.

Retail Banking - Republic of Ireland (26% of group profits*)

Bank of Ireland believes that its strong record in retail banking
could be leveraged in the combined group:

domestic retail banking operations have delivered annual double-
digit pre-tax profit growth over the last five financial years
and pre-tax profits were up 11% in the most recently reported
trading period;

in the Republic of Ireland, Bank of Ireland has achieved market
leadership in new mortgages, despite vigorous competition.
Between 1998 and 2002, it increased its share of new mortgages
from 21% to 26%;


its cross sales ratio, with a penetration of 3.1 products per
customer, is above U.K. industry averages; and

it has leading market positions in Ireland in business and
personal current accounts, mortgages, deposits, credit cards and
asset finance.
U.K. Financial Services (25% of group profits*)

Bank of Ireland's U.K. operations have achieved steady growth
since acquiring Bristol & West in July 1997. The U.K. operations
have steadily increased their contribution to group pre-tax
profits to a total of EUR 318 million (STG o201 million) in the
year ended 31 March 2002, while following a strategy of re-
positioning the business to adapt to changing market conditions.
In its mortgage business, Bank of Ireland has pro-actively
changed its product mix to exploit niches seen as offering a
better risk/reward trade-off, without adverse impact on credit
quality.

In March 2002, the group reorganised its Bank of Ireland U.K. and
Bristol & West operations into the U.K. Financial Services
division to concentrate on four businesses based on market
segmentation rather than brand, as follows:

* Profit before tax and exceptional items excluding group and
central and including grossing - up for the year ended 31 March
2002. Bank of Ireland undertakes tax based transactions at rates
which are less than normal market rates in return for tax relief
arising from incentives for industrial developments and other
reliefs. To assist in making valid comparisons of pre-tax
performance the analysis of business unit performance is grossed-
up.

Business Financial Services, targeting selected niches of the
business banking market in Great Britain;

Personal Lending, which combines the secured personal lending
businesses of Bristol & West and Bank of Ireland in the U.K.;
Northern Ireland, which operates as an integrated business and
personal bank with 45 branches in Northern Ireland; and
Financial Advice and Savings, distributing investment and other
products under the Chase de Vere Investments, Bristol & West and
MXFS brands.
Wholesale Financial Services (29% of group profits*)

Bank of Ireland has developed a strong wholesale banking skillset
and has proved itself in highly competitive markets, both
domestic and international. The capabilities of Bank of Ireland
in wholesale banking that have delivered strong and managed
profit growth would be applied to the combined group to
facilitate safe growth and diversification of risk and earnings.

These capabilities include:
a strong focus on risk-adjusted reward and return on equity;
well-developed customer relationship management processes; and
proven credit and risk management skills.

Pre-tax profits in Bank of Ireland's Wholesale Financial Services
Division, which incorporates Corporate Banking, International
Lending and Treasury and International Banking, have increased at
an average annual growth rate of 21% over the last five financial
years. The underlying quality of the wholesale portfolio was
demonstrated by a loan loss charge of 20 basis points in the year
to 31 March 2002.

Asset Management and Securities Services (10% of group profits*)

Bank of Ireland Asset Management is the leading fund manager in
Ireland, with EUR 57 billion (STG o35 billion) of assets under
management as at 31 March 2002, and is a leading manager of
international equities in the United States. The business was
developed organically by Bank of Ireland. In the year ended 31
March 2002, Asset Management and Securities Services generated
EUR 126 million (STG o79 million) in pre-tax profits for the
group. Over the last five financial years, pre-tax profits have
increased by an average annual growth rate of 24%. Iridian, an
established and proven US manager of US equities for
institutional clients, was acquired in September of this year.

Life Assurance and Pensions (10% of group profits*)

Bank of Ireland was one of the first European banks to establish
a greenfield bancassurance operation and has been among its most
successful exponents. With the subsequent acquisition of a
broker-orientated life company, the group has achieved an
effective and profitable life and pensions business delivering
products through both its branch network and broker channels. It
has increased life and pension sales (annual premium equivalent
basis) by over 20% annually over the last five financial years,
with growth driven through both bancassurance and broker
distribution channels.

Laurence Crowley, Governor of the Bank of Ireland, said today:

"We believe that our proposal would create significant value for
Bank of Ireland stockholders and would produce greater value for
Abbey National's shareholders than a standalone strategy. Bank of
Ireland has a strong commitment to stockholder value and will not
contemplate any action that would compromise that commitment. Our
management team has developed detailed business plans based on
sound commercial, strategic and operational principles, and on
the obvious strategic fit between the two groups.

I am confident that our management team has the skills and
experience to reinvigorate Abbey National's performance and
deliver substantial benefits from the combination. I am willing
to meet again with Lord Burns, Chairman of Abbey National, to
discuss how we might co-operate to explore this opportunity
further."

Enquiries:

Bank of Ireland
David Holden
Head of Group Corporate Communications
+353 (0)1 604 3833
+353 (0)86 255 1093

Mary King
Head of Group Investor Relations
+353 (0)1 604 3501
+353 (0)86 244 5024

Cazenove
Michael Wentworth-Stanley
Tim Wise
+44 (0)20 7588 2828

IBI Corporate Finance
Peter Crowley
Mark Spain
+353 (0)1 661 6633

Schroder Salomon Smith Barney
Will Samuel
Anthony Parsons
+44 (0)20 7986 4000

J&E Davy
Kyran McLaughlin
+353 (0)1 679 7788

Media
Billy Murphy, Drury Communications, Dublin
+353 (0)1 260 5000
John Antcliffe, Smithfield Financial, London
+44 (0)20 7360 4900

The directors of Bank of Ireland accept responsibility for the
information contained in this announcement, save that the only
responsibility accepted by them for the information contained in
this announcement relating to Abbey National and its directors
which has been compiled from published sources, is to ensure that
such information has been correctly and fairly reproduced and
presented. Save as aforesaid, to the best of the knowledge and
belief of the directors of Bank of Ireland (who have taken all
reasonable care to ensure that such is the case), the information
contained in this announcement is in accordance with the facts
and does not omit anything likely to affect the import of such
information.

Cazenove is acting for Bank of Ireland and no one else in
connection with the proposed transaction and will not be
responsible to anyone other than Bank of Ireland for providing
the protections afforded to clients of Cazenove or for providing
advice in relation to the proposed transaction.

IBI Corporate Finance, which is regulated by the Central Bank of
Ireland, is acting for Bank of Ireland and for no one else in
connection with the proposed transaction and will not be
responsible to anyone other than Bank of Ireland for providing
the protections afforded to its customers, or for providing
advice in relation to the proposed transaction.

Schroder Salomon Smith Barney is acting for Bank of Ireland and
no one else in connection with the proposed transaction and will
not be responsible to anyone other than Bank of Ireland for
providing the protections afforded to clients of Schroder Salomon
Smith Barney or for providing advice in relation to the proposed
transaction. "Schroder" is a trademark of Schroder Holdings plc
and is used under licence by Schroder Salomon Smith Barney.

J&E Davy, which is regulated by the Central Bank of Ireland, is
acting for Bank of Ireland and for no one else in connection with
the proposed transaction and will not be responsible to anyone
other than Bank of Ireland for providing the protections afforded
to its customers, or for providing advice in relation to the
proposed transaction.

In connection with a possible transaction involving Bank of
Ireland and Abbey National plc, Bank of Ireland and/or its
affiliates may file certain materials with US Securities and
Exchange Commission (the "SEC"), relating to the transaction.
These materials may not be final and may be further amended.
Shareholders are urged to read the definitive versions of these
materials, as well as any other relevant documents filed or that
will be filed with the SEC, as they become available, because
these documents contain or will contain important information.
The preliminary materials, the definitive versions of these
materials and other relevant materials (when they become
available), and any other documents filed by Bank of Ireland
and/or its affiliates with the SEC may be obtained for free at
the SEC or by directing inquiries to Group Investor Relations
Dept, Bank of Ireland.

This communication shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
securities in any jurisdiction in which such an offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the
Securities Act of 1933 as amended, or pursuant to an exemption
from the registration requirements of the Securities Act of 1933.


ABBEY NATIONAL: Takeover Rumors Fuel 11% Rise in Share Price
------------------------------------------------------------
After turning down the GBP10.3 billion takeover bid of the Bank
of Ireland, Abbey National found itself soaring again, as
speculations pointed to a possible higher bid from other banks.

It is believed that aside from the Bank of Ireland, the second-
largest mortgage lender in U.K. had also received several
approaches from other banks, including the National Australia
Bank Ltd.  Last year, U.K. regulators blocked Lloyds TSB Group
Plc's takeover bid of GBP18 billion on antitrust concerns.

"Bank of Ireland probably won't end up with Abbey," Richard
Peirson, a fund manager at Framlington Investment Management,
told Bloomberg in an interview.  "It's likely a U.K. bidder bank
will enter the fray."

Royal Bank of Scotland Group Plc or HSBC Holdings Plc might make
offers for Abbey National, Mr. Peirson said.  Royal Bank of
Scotland spokesman Howard Moody and HSBC spokesman Adrian Russell
declined to comment.

Bank of Ireland's stock-and-cash offer was worth between 678
pence and 708p a share as of Monday, the company said in a
statement.  Shares of Abbey National have gained 11 percent to
685p, after Abbey National's board unanimously turned down the
proposal of the Bank of Ireland.

"Looking at the stock's reaction, most people feel it's unlikely
Bank of Ireland will increase its offer," Nigel Poynton, a money
manager at NCB Stockbrokers, told Bloomberg.

But a takeover by Bank of Ireland would yield cost savings of
GBP240 million, of which almost half would come from the consumer
banking business and GBP20 million would be from lower taxes from
having the headquarters in Dublin, Bloomberg said.

There also would be revenue gains of GBP160 million, Bank of
Ireland claimed recently. The benefits would be achieved within
four years of the transaction, the company said.

Bank of Ireland last year generated about a quarter of its profit
from the U.K., where it owns Bristol & West, a lender with about
120 branches. Bank of Ireland has about 2 million customers in
Britain.

Still, Abbey National believes it can give shareholders better
returns than Bank of Ireland by focusing on mortgages and
consumer banking, cutting costs and making better use of its
capital, perhaps by selling businesses.

Abbey National's share price has lost as much as 48 percent of
its value this year.


AES DRAX: Fitch Dwgr Drax Holdings & Inpower Ltd to 'CCC'
--------------------------------------------------------
Fitch Ratings, the international rating agency, has downgraded
the ratings for the Senior Secured Bond issued by AES Drax
Holdings Limited ('DrxHold') and the Senior Secured Bank loan
rating for Inpower Limited ('Inpower') to 'CCC' from 'BB'. Fitch
has also downgraded the Senior Notes issued by AES Drax Energy
Ltd ('DrxEn') to 'CC' from 'CCC'. All of these ratings remain on
Rating Watch Negative.

All these debt issues relate to the 3.96-gigawatt coal-fired
power station located near Selby in the U.K. and operated by AES
Drax, which produces around 8% of the annual power produced in
England and Wales.

The ratings have been lowered to reflect the lowering to 'CCC' of
the rating assigned to TXU Europe Ltd's ('TXE') senior unsecured
debt and obligations guaranteed by TXE as well as the
confirmation today, by TXE, that it is in on-going negotiations
regarding its long-term contracts including all scheduled
payments. The Drax plant had entered into an off-take agreement
(primary hedge agreement 'PHA') with a subsidiary of TXE, Eastern
Power and Energy Trading ('EPET'), that covers a significant
portion of the plant's output. The cash flows under this
agreement provide very material support to the project's
financial structure. Given the leverage of the project and the
precipitate fall in wholesale prices over the past year, the
project would be unlikely to sustain coverage levels were it
obliged to recontract on the open market.

In August 2002 AES Corp injected cash into DrxEn to enable
interest due on the DrxEn notes to be paid. Since then the
ratings of AES have been lowered to 'B' from 'BB-' (BB minus),
and the company is currently in the process of concluding a
complicated refinancing to address its own liquidity problems.
Given this situation at AES, the ratings of Drax do not rely on
any benefit from parental support.

The ratings will be maintained on Rating Watch Negative pending
the renegotiation of the PHA. In addition, Fitch would expect to
review any revised forecast coverage levels, including
assumptions for cost savings and sensitivity to wholesale power
prices. The agency will also monitor Drax's ability to continue
to meet its obligations in respect of other aspects of the
project structure in the current environment.

CONTACT:  Fitch Ratings
          Gracie Ebadan-Bola, +44 20 7417 4308
          Isaac Xenitides, +44 20 7417 4300
          Kris Anderson, 44 20 7417 4361 (Media Relations)


ARM HOLDINGS: Gloomy Assessment of Prospects Turns Off Investors
----------------------------------------------------------------
Mobile phone semiconductor designer ARM Holdings Plc slipped anew
Monday, dropping 3.8% after admitting that revenue won't probably
improve in the next two quarters, says Bloomberg.

The drop was in sharp contrast to the 4.25% gained of FTSE's
techMARK 100 Index.  The company now trades at 44.5p, valuing the
company GBP450 million.

According to Bloomberg, the company has lost two thirds of its
market value since October 2, when it said third-quarter sales
declined and would be little changed in the fourth.

The company now sees revenue "flattish" through the first quarter
of 2003 and plans to cut 10 percent of its workforce this year,
said Chairman Robin Saxby in an interview with Bloomberg.

The outlook "for the foreseeable future is pretty downbeat," said
Robert Lea, an analyst at Evolution Group Plc's Beeson Gregory,
who rates the shares "hold."

"It hammers home that life is incredibly difficult out there and
will remain so," Mr. Lea told Bloomberg in a separate interview.

ARM's third-quarter net income dropped 33% to GBP5.9 million or
0.6 pence a share, from GBP8.8 million or 0.9p, a year ago.  ARM
plans to cut its workforce to "just over" 700, Chief Financial
Officer Tim Score said on a conference call.

The company will take a fourth-quarter charge of about GBP2
million to pay for the job cuts and expects savings of about GBP5
million annually from the reductions, it said.

The news agency says ARM makes more than half of its revenue
licensing its technology to chipmakers, which use the designs to
make processors for products such as Nintendo Co.'s Game Boy
Advance consoles, Nokia Oyj's handsets and car braking systems.
It also receives so-called royalties, a percentage of each ARM-
based product sold.


CABLE & WIRELESS: Irish Division Partners With Avaya in Ireland
---------------------------------------------------------------
Cable & Wireless, the global telecommunications group, today (14
October 2002) announced that its Irish Systems Integration
Division has become Avaya's first Gold BusinessPartner in
Ireland. This accreditation is given to authorised Avaya
BusinessPartners who have achieved consistently high levels of
technical, service and business competencies required for the
design, installation and support of Avaya systems.

Avaya, a leading global provider of communications networks to
businesses, awarded the accreditation to Cable & Wireless as a
result of its outstanding achievement and commitment to customers
over the six months since the company agreed to sell Avaya's
communication network portfolio, including data switches,
wireless Local Area Network (LAN) and Virtual Private Network
(VPN) products, in Ireland.

The Gold accreditation was measured on exacting criteria demanded
by Avaya's authorised BusinessPartner Accreditation Program. The
main measures were:

Customer Support - Cable & Wireless was evaluated on-site over
two days by an Avaya Service Assessment team. The audit assessed
Cable & Wireless on its: front-line customer service, field
service, installation and project management; operational
performance; spares management and logistics. Cable & Wireless
proved its ability to support its customers' business and Avaya's
communication technologies.
Individual Certification - measured by the number of Avaya-
certified individuals within the company Business Commitment -
determined by financial and other business metrics Tadhg Foley,
managing director, Systems Integration Ireland, Cable & Wireless,
commented, "This Gold accreditation from Avaya brings another
very strong offering to our corporate customer base in Ireland.
They can be confident that our product and service offerings are
being monitored and assessed to meet the very highest standards."

Clive Sawkins, vice-president, U.K. and Ireland, Avaya,
commented, "Cable & Wireless has impressed us with its ability to
sell and support even the most complex Avaya converged
communication systems and services in Ireland. The accreditation
- coupled with Cable & Wireless' experience in the market and
Avaya's systems which lead in their field globally - provide
customers with a very strong communications platform on which to
build their businesses. From IP telephony to CRM applications,
customers can adapt their networks and gain benefits at their own
pace."

Cable & Wireless, Ireland's Systems Integration/Networking
Company of the Year 2002*, is one of the largest specialist
providers of data, IP and voice network systems to Irish business
customers. The team of 150 includes 90 data and voice customer
service engineers based in nine locations nationwide. Products
and services include design, implementation and management of
integrated communications solutions such as local and wide area
networks, PBX and contact centre systems, IT cabling and e-
security. Cable & Wireless has also introduced an innovative
consulting service that aims to help customers achieve lasting
business advantage from converging communications technologies.
The worldwide resources of Cable & Wireless underpin this strong
technical and service capability.

*Awarded by the organisers of ICT Expo, April 2002

About Cable & Wireless
Cable & Wireless is a major global telecommunications business
with revenue of over o5.9 billion (US$8.6 billion) in the year to
31 March 2002 and customers in 80 countries and consists of two
core and complementary divisions: Cable & Wireless Regional and
Cable & Wireless Global. Cable & Wireless Regional offers a full
range of telecommunications services in 33 countries around the
world. Cable & Wireless Global's focus is on IP (Internet
protocol) and data services and solutions for business customers.
It has developed advanced IP networks and value-added services in
the US, Europe and the Asia-Pacific region in support of this
strategy. With its financial strength and the capability of its
global IP infrastructure, Cable & Wireless holds a unique
position in terms of global coverage and services to business
customers. For more information about Cable & Wireless, go to
www.cw.com.

About Avaya
Avaya Inc. designs, builds and manages communications networks
for more than one million businesses around the world, including
90 percent of the Fortune 500r. A world leader in secure and
reliable Internet Protocol (IP) telephony systems, communications
software applications and services, Avaya is driving the
convergence of voice and data applications across IT networks
enabling businesses large and small to leverage existing and new
networks to enhance value, improve productivity and gain
competitive advantage. For more information visit the Avaya
website: http://www.avaya.com.

Avaya in Ireland
Avaya employs over 220 - TBC people in Ireland and offers
converged voice and data, customer relationship management,
messaging, multi-service networking and structured cabling
products and services. Customers in Ireland include American
Airlines, Compaq, IBM, Lufthansa, Bank of Ireland (Banking 365)
and Ulster Bank. Also, Avaya has a number of business partners in
Ireland who sell a range of voice, data and cabling products. For
more information about Avaya Ireland, visit its Web site at
http://www.avaya.ieor telephone +353 (0)1 204 2000.

ISSUED BY:
     Barry Chapman
     COMIT Marketing
     Tel: +353 (01) 498 4641
     Mob: +353 (086) 608 2031
     Email: bchapman@comitmarketing.com

CONTACT:
     Tadhg Foley
     Cable and Wireless, Ireland
     Tel: + 353 (01) 404 0404
     E-mail: tadhg.foley@cw.com

     Daniel Bausor
     Avaya, U.K. & Ireland
     Tel - ONE Number: +44 (0)1483 308992
     E-mail: dbausor@avaya.com


CITY GENERAL: Issues Notice Regarding Scheme of Arrangement
-----------------------------------------------------------
Notice is given that, by an Order dated October 3, 2002 made in
the High Court of Justice of England and Wales in the mater of
General Insurance Company, the scheme of arrangement proposed to
be made between the company and its Scheme Creditors pursuant to
section 425 of the Companies Act 1985 which was voted on and
approved by Scheme Creditors at a meeting held on August 16,
2002, was sanctioned.

A copy of the Order was lodged with the registrar of companies on
October 7, 2002, and the Scheme became effective on that date.

Scheme Creditors wishing to claim in the Scheme must complete and
return Claim Forms in accordance with the instructions
accompanying them and the provisions of the Scheme, by 23:59 on
the Final Claims Submission date, being January 7, 2003. Failure
to do so will result in the Scheme Creditor concerned not being
entitled to claim in or receive payment under the Scheme.

Should you have any questions regarding this Notice, please
address them to David Evans at:

      City General Insurance Company Limited
      Suite 208, Coppergate House
      16 Brune Street, London EC1 7NJ
      Phone: +44(0)20 7953 8367
      Fax: +44(0)20 7953 8427


EQUITABLE LIFE: Regulatory Probe on Ex-auditor Favors Firm
----------------------------------------------------------
Equitable Life won a muted but significant victory in its suit
against former auditor Ernst & Young after the High Court in
London denied the latter's appeal to delay a regulatory probe
until after the conclusion of the pending case.

According to the Times Online, the denial by Mr. Justice Burnton
means that the investigation by the accountancy profession's
Joint Disciplinary Scheme could continue simultaneously with the
trial of the case.

The paper says that, although findings by the JDS would not be
admissible as evidence in Equitable's case against E&Y, the
investigation's outcome, however, would inevitably influence any
settlement negotiations between Equitable and its former auditor.

Ernst & Young faces a GBP2.6 billion damage-suit filed by
Equitable, which claims that its former auditor was equally
liable for the near collapse of the company two years ago.
Equitable closed to new business in December 2000 after the High
Court said it must meet in full guarantees offered to holders of
guaranteed pension plans at a cost of GBP1.5 billion.

In its suit, Equitable claims that E&Y, which was subsequently
fired as its auditor, should not have signed off its accounts as
a result of the huge liabilities it faced.  Equitable says it
could have been sold for GBP2.9 billion had E&Y acted properly.

E&Y maintains that the JDS probe, which has been delayed for
three months because of its action, could prejudice its defense.
But Mr. Justice Burnton ruled that the auditing firm had "not
established that there is now a real risk of serious prejudice."

He added: "It would be highly regrettable if the bringing of
civil proceedings were to be regarded as necessarily supporting a
stay of a regulatory investigation or of disciplinary proceedings
conducted in and for the public interest."

The report says Mr. Justice Burnton denied leave to appeal but
granted E&Y a temporary stay until October 25 to enable the firm
to go direct to the Court of Appeal.  The JDS has been able to
review documents related to E&Y Equitable audit work but has been
barred from interviewing key staff because of the E&Y action.

Times Online says that were the JDS to find evidence of
negligence or wrongdoing it would have to bring the case before
an independent tribunal, which it is thought would be unlikely to
happen until the middle of next year. The tribunal has the power
to levy unlimited fines.

"We are disappointed that the court did not grant a stay of the
JDS inquiry. We believe our defence of the claim brought by
Equitable Life will be prejudiced by the continuance of the
inquiry at this stage," an E&Y spokesman told the Times Online in
an interview.

A spokesman for Equitable said: "We are moving ahead with the
legal action against Ernst & Young. We are as strong in our
belief that there is a case to answer as we were when we started
this action."

Hearing on E&Y's motion to dismiss the suit filed by Equitable is
scheduled for January 13 next year.

Aside from E&Y, some 15 former directors of Equitable are also
facing damage suits for GBP2.9 billion.  Like E&Y, they have
denied any wrongdoing.


INSTINET GROUP: Announces Third-Quarter 2002 Results
----------------------------------------------------
Reuters 63%-owned subsidiary Instinet published the following
statement on 15 October 2002.

Company Takes Charge for Goodwill Impairment

Instinet Group Incorporated (Nasdaq: INET) announced a net loss
of $528.4 million, or $2.05 per share on a fully diluted basis,
for the third quarter ended September 30, 2002, compared to a net
profit of $8.2 million, or $0.03 per share, for the third quarter
of 2001. Instinet's results included a pre-tax, non-cash charge
of $552 million for impairment of goodwill in the third quarter.

Excluding the goodwill impairment charge, as well as net
investment results and a restructuring charge, together with the
related tax effects, pro forma operating results in the third
quarter was $3.0 million, or $0.01 per share. 1

"There's no denying that we are facing tough business conditions
and a very competitive landscape," said Ed Nicoll, Instinet's
Chief Executive Officer. "Even so, we are committed to
rationalizing our cost structure to make our company profitable
at the current level of business. Once we reduce costs, we
believe we'll be in an excellent position to leverage our
commanding market share position to serve our customers while
improving profitability."

Goodwill Charge

The charge for goodwill impairment is based on the application of
impairment tests prescribed by recently enacted accounting
standards (FAS 142), and eliminates all goodwill from Instinet's
balance sheet as of September 30, 2002.

These accounting standards required the company to initiate a
goodwill impairment test as a result of the recent decline of
Instinet's stock price. The company performed a valuation of its
tangible and intangible assets, and based on this valuation and
the application of the new accounting standards, believes that an
impairment charge is appropriate. This charge results in a non-
cash charge to the company and no reduction to tangible book
value.  A related tax benefit of $26 million has been recorded.

Business Highlights

�        Instinet and Island Holding Company, Inc. completed
their merger on September 20, 2002. Island became a wholly owned
subsidiary of Instinet. This combination offers professional
investors and traders superior trading platforms and diverse
trading choices in worldwide marketplaces. Island's operating and
financial data, subsequent to September 20, 2002, are aggregated
with Instinet's results for the third quarter.

�        In connection with the Island transaction, Instinet paid
a one-time special cash distribution of $1.00 per share on all
shares that were issued and outstanding prior to the closing. The
aggregate amount of the distribution was approximately $249
million, and it was paid on October 3, 2002.

�        A record 26.5 billion U.S. equity shares was traded
through Instinet in the third quarter of 2002, up 38% from 19.2
billion shares in the previous quarter, and up 70% from 15.6
billion executed in the third quarter of 2001. U.S. equity shares
executed during the third quarter of 2002 consisted of 22.6
billion Nasdaq-listed shares and 3.9 billion exchange-listed
shares.

�        Instinet's share of Nasdaq-listed volume was a record
20.5% in the third quarter compared to 13.8% in the previous
quarter and 13.5% in the third quarter of 2001.  The company's
share of total U.S. equity volume was a record 11.1% in the third
quarter versus 8.5% in the previous quarter and 8.6% in the
comparable period last year.

�        The company's annualized fixed-cost base was $547
million in the third quarter, down $175 million or 24% from the
year-ago quarter. (The fixed-cost base excludes non-recurring
expenses - charges for goodwill impairment and restructuring --
and variable costs, including soft dollar and commission
recapture, brokerage, clearing and exchange fees, and broker-
dealer rebates.)

Financial Performance

Revenues

Total revenues for the third quarter were $254.3 million, down
$65.4 million or 21% from the third quarter of 2001 and $14.4
million or 5% from the previous quarter. Transaction fee revenue
for the third quarter was $263.9 million, down 15% from $311.7
million in the comparable period in 2001. Net of soft dollar
expenses and commission recapture expenses, and broker-dealer
rebates, third quarter transaction fee revenue declined 34% from
the third quarter of 2001, and 5% from the previous quarter.

Net transaction fee revenue from U.S. equity transactions
decreased 7% from the prior quarter with a 38% increase in shares
traded on Instinet being offset by a 31% decrease in average
pricing. The decline in average pricing resulted primarily from a
shift in the mix of volume towards customers at lower price
levels, primarily U.S. broker-dealers.

Net transaction fee revenue from U.S. equities traded by U.S.
broker-dealers represented approximately 24% of total net
transaction fee revenue in the third quarter compared to 22% in
the second quarter of 2002, and 40% in the year-ago quarter.
This shift was largely due to the broker-dealer rate-card changes
Instinet began implementing in the first quarter of 2002. Buy-
side institutions trading U.S. equities made up approximately 49%
of total net transaction fee revenue in the third quarter versus
52% in the previous quarter and 43% in the comparable period in
2001.

Net transaction fee revenue from non-U.S. equities increased
slightly from the previous quarter, and made up 24% of the total,
compared to 22% in the prior quarter and 17% a year earlier.

Interest income for the third quarter was $10.7 million, down 25%
from the comparable period in 2001.  During the quarter, Instinet
recorded a net investment loss of $20.3 million, resulting mainly
from a write-down in the carrying value of some of the company's
non-public investments, primarily Archipelago Holdings LLC.

Expenses

Instinet's total expenses from continuing operations for the
third quarter were $822.7 million.  Excluding goodwill impairment
and restructuring charges, expenses were down approximately 5%
from the previous quarter and 2% year-over-year.  Further
excluding soft dollar expenses and commission recapture expenses,
brokerage, clearing and exchange fees, and broker-dealer rebates
(costs directly related to transactions), expenses were down 16%
from the previous quarter and 24% year-over-year.

The following cost lines decreased from the prior quarter:

�        Compensation and benefits expense was $63.8 million,
down 10% from the previous quarter, and 25% from the previous
year, reflecting lower staff levels and lower levels of
discretionary incentive compensation.

�        Communications and equipment expense was $26.6 million,
down 9% from the previous quarter and 28% from the year-ago
quarter, primarily due to successful efforts to gain network and
systems efficiencies.

�        Soft dollar and commission recapture expenses were $51.8
million, down 16% from the previous quarter and essentially in
line with the previous year. An increase in commission recapture
only partly offset a decline in Instinet's soft dollar business,
reflecting the decrease in buy-side trading volumes.

�        Depreciation and amortization expenses were $16.7
million, down 7% from the previous quarter and 21% from the
previous year, due to lower levels of capital spending and the
exclusion of goodwill amortization as a result of recent
accounting changes.

�        Professional fees fell 23% from the prior quarter, and
37% from the year-ago quarter, to $5.1 million, reflecting
successful efforts to limit the company's use of external
consultants.

�        Occupancy costs decreased 10% from the previous quarter,
and 15% from the third quarter of 2001, to $12.2 million as the
company continued to consolidate office facilities.

�        Marketing and business development expenses were $2.5
million, down 67% from the previous quarter, reflecting reduced
discretionary spending, although they were higher than the
unusually low $0.8 million recorded in the year-ago quarter.

�        Other costs decreased 41% from the previous quarter, and
31% from the year-ago quarter, to $9.9 million, due to cost
reduction efforts.

The following cost lines showed increases over the prior quarter:

�        Brokerage, clearing and exchange fees were $42.1
million, up 25% from the prior quarter and 26% from the third
quarter of 2001, reflecting higher transaction volumes.

�        Broker-dealer rebates increased 53% to $39.0 million
from $25.5 million in the previous quarter, reflecting the impact
of the liquidity-based broker-dealer pricing plan first
implemented in March 2002.

Balance Sheet

At September 30, 2002, Instinet had net cash of approximately
$821 million and $953 million of tangible net assets. (After
allowing for the $1.00 per share special distribution made in
early October, net cash would be $572 million.) At September 30,
2002, there were approximately 329.2 million shares of common
stock outstanding.

Business Review

Instinet's average daily share volume in Nasdaq-listed stocks
rose 40% in the third quarter from the previous quarter, while
overall market volume in Nasdaq-listed stocks declined by 6%,
leading to an increase in Instinet's share of Nasdaq volume to
20.5% from 13.8%. Instinet's U.S. broker-dealer customer group
accounted for most of this gain, following business initiatives
taken by the company earlier this year, most notably the
introduction of a revised rate schedule in the first quarter. The
new rates resulted in a substantial decrease in the effective
commission rates paid by this group, and an overall decline in
associated revenue, despite increased volumes.

Important operating achievements during the quarter included:

�        Instinet Trading PortalSM, the company's new front-end
trading application, was deployed at approximately 300 Instinet
client sites by the end of the third quarter, many with multiple
site licenses. Deployment was ahead of schedule. Portal has
achieved significant volume penetration; on its peak trading day
to date - 14.1 million shares on October 1 - the new application
contributed approximately 20% of Instinet's total institutional
order flow. The company is targeting a total of 400 Portal
installations by year-end.

�        NewportTM , Instinet's patent-pending global program-
trading & execution management solution, was being used by 22
major clients in the U.S. and Europe by the end of the quarter,
more than twice the number of clients than in the previous
quarter. These were primarily multinational banks and global
index fund managers, with between one and eight users at each
customer site.  The company continues to target a total of 40-50
client-site installations by year-end. In addition, Newport is
used actively on Instinet's own program-trading and working-order
desks to receive and trade portfolios and discretionary orders on
behalf of clients.

�        Continuing progress was made in the company's efforts to
develop its block trading functionality known as Targeted Orders,
which is designed to allow clients to maximize their order
exposure while minimizing information exposure. Our development
team is on schedule to begin beta tests this month, and to go
into full production by the end of the year.

"Instinet's gains in volume and market share are encouraging
signs of the company's success in connecting with its customers
and putting a highly competitive offering into the marketplace,"
said Jean-Marc Bouhelier, Chief Operating Officer, Instinet Group
Incorporated. "The business environment remains extremely
challenging, but we believe that our core strategy of aligning
with our client groups, delivering innovative new products and
reducing our cost base, will continue to improve our competitive
position and the profitability of our operations."

Regulatory Challenges

Instinet's ECNs face a number of regulatory challenges, such as
integration into the national market system for listed
securities, as well as ongoing SEC initiatives affecting access
fees and market data revenue sharing. These challenges have had,
and may continue to have, a negative impact on Instinet's
transaction revenues.

Outlook

"As we look ahead to achieving our company's goals and serving
our customers, two priorities will be paramount," said Ed Nicoll.
"First, we are absolutely committed to achieving cost synergies
from the Instinet-Island combination.  At the time of  the
merger, we identified cost synergies of approximately $25 million
per year.  We are thoroughly reviewing the company's entire cost
structure, and will have more details soon.  At this time, I can
say that we expect to achieve substantially more than $25 million
per year. The total cost synergies should fall in four areas:
technology, clearing, facilities, and compensation."

Nicoll added that in technology, the company was working to
rationalize Instinet's and Island's trading platforms and
infrastructure over the long term and to adopt a technology
solution that will be both low-cost and robust and, for
customers, reliable, scalable, and highly efficient. In clearing,
the company intends to move Island's clearing to Instinet
Clearing Services. In facilities, the company intends to
rationalize office space and data centers. In terms of
compensation expense, the company is reviewing headcount at all
levels to produce a leaner and more efficient structure.

"Our second priority," noted Nicoll, "is to realize as much
benefit as possible from our two liquidity pools and from
complementary customer bases. Instinet has set the standard for
providing its customers with value-added tools to execute large
orders while minimizing market impact.  With the benefit of our
two liquidity pools, the Island customer base will have the
chance to interact with this Instinet liquidity.  In return,
Instinet customers will, of course, have the opportunity to
interact with the extra liquidity from Island. In the first two
weeks after the closing of the merger, the latest period for
which we have disclosed data, Instinet's and Island's two
liquidity pools averaged about 34% OTC market share. This
liquidity means that we can offer our customers better execution
opportunities."

Webcast

Instinet will webcast a conference call to discuss its third
quarter results at 5:00 p.m. New York time today at
http://www.investor.instinet.com.After the call, a replay will
be available at the same address for approximately three days,
followed by a transcript of the call.

About Instinet

Instinet, through affiliates, is the largest global electronic
agency securities broker and has been providing investors with
electronic trading solutions for more than 30 years. Our services
enable buyers and sellers worldwide to trade securities directly
and anonymously with each other, have the opportunity to gain
price improvement for their trades and lower their overall
trading costs. Through our electronic platforms, our customers
also can access over 40 securities markets throughout the world,
including Nasdaq, the NYSE and stock exchanges in Frankfurt, Hong
Kong, London, Paris, Sydney, Tokyo, Toronto and Zurich. We also
provide our customers with access to research generated by us and
by third parties, as well as various informational and decision-
making tools. Unlike most traditional broker-dealers, we act
solely as an agent for our customers and do not trade securities
for our own account or maintain inventories of securities for
sale.

To see Financial Statement:
http://bankrupt.com/misc/Instinet.doc

CONTACT:  Investor Relations
          John Pitt
          Instinet Group Incorporated
          Phone: 212 310 7481
          E-mail: john.pitt@instinet.com


INVENSYS PLC: Stocks Up as Manufacturing Sector Slowly Recovers
---------------------------------------------------------------
Signs pointing to a recovery in the manufacturing sector have led
many investors to buy anew shares of Invensys Plc, which is
expected to benefit from any upturn in the sector, says
Bloomberg.

Shares of the company edged 14% higher on Monday, as investors
anticipated that a manufacturing recovery will prompt orders for
Invensys' factory controls and electronic machinery.  The company
now trades at 64.5p or 8 pence higher.

It's been a while now since the company tasted an upswing in its
stocks.  In the past six months alone, the firm's stocks lost 44%
of its value as the world economy stalled, hurting demand.  To
counter the negative effects of the recession, the company led by
CEO Rick Haythornthwaite reorganized and sold several businesses
to halve debt to about GBP1.5 billion ($2.3 billion).

Recently, the company sold its Drive Systems business to NewCo
(Eastern) Ltd, a company formed by the management team of
Invensys Drive Systems and their investment partner Compass
Partners European Equity Fund, L.P., for a cash consideration of
US$145 million.

Drive Systems is a leading global supplier of AC inverters, DC
drives, Servo and Vector controllers. For the twelve months
ending March 31, 2002, the business generated revenues of US$115
million and operating profit of US$20 million.

In September, the company also sent its Rexnord business to The
Carlyle Group, a US based private equity firm, for a gross
consideration of US$913 million, less US$33 million in respect of
working capital, giving net proceeds of US$880 million.

Rexnord is a leading global supplier of power transmission
components, conveying equipment, bearings, chains, couplings,
drives, motor brakes and idlers for industries worldwide. For the
twelve months ended March 31, 2002, the business generated
revenues of USUS$724 million and operating profit of USUS$104
million.


RAILTRACK PLC: Moody's Affirms and Withdraws Ratings
----------------------------------------------------
Moody's Investors Service affirmed and withdrew all of Railtrack
PLC's Baa1 long-term and P-2 short-term ratings following the
company's payment of obligations.

A high court released Railtrack from administration on October 2
with the belief that such move would enhance the firm's operation
and ability to pay debts.

Moody's action follows the prepayment of all outstanding long-
term bonds, the cancellation of Railtrack's medium-term note
programme, the repayment of all short-term commercial paper and
the cancellation of the commercial paper programme.

Network Rail's acquisition of Railtrack has raised finance from
commercial banks for the prepayment of bonds.

Railtrack PLC is the owner and operator of Great Britain's heavy
rail infrastructure, and has its head office in London, United
Kingdom.

The Baa1 ratings on the following debt securities have been
withdrawn following prepayment and cancellation of facilities:

- GBP 400 million 3.5% Convertible Bonds due 2009

- GBP 350 million 5.875% Bonds due 2009

- GBP 300 million 7.375% Bonds due 2022

- GBP 250 million 5.875% Bonds due 2028

- GBP 135 million 9.125% Bonds due 2006

- GBP 100.7 million 9.125% Bonds due 2016

- GBP 1 billion Bank Loan Facility due 2004

- EUR 11.5 million Medium-Term Note due 2009

- EUR 3 billion Euro Medium-Term Note Programme.


TXU EUROPE: Moody's Cuts Special Purpose Vehicle to Caa2
--------------------------------------------------------
Another unit of TXU Corp., a U.S.-based energy company, suffered
a credit rating downgrade, this time by Moody's Investors
Service.

TXU Europe Funding Limited's EUR500 million Secured 7% Notes due
2005 was cut Tuesday to Caa2 from Baa3 and will continue to be
reviewed for further downgrade, says Moody's.

"The rating action results from the downgrade of the underlying
bonds issued by TXU Eastern Funding Company (rated Caa2, under
review for further downgrade), which are unconditionally and
irrevocably guaranteed by TXU Europe Limited, rated Caa2, also
under review for further downgrade," Moody's explains.

"The SPV also benefited from two currency swaps provided by
Morgan Stanley Capital Services Inc. with a guarantee by Morgan
Stanley (rated Aa3), and UBS Warburg (rated Aa2); however,
Moody's notes that the structure provides for a transfer of the
swaps to TXU Europe Limited if the underlying bonds issued by TXU
Eastern Funding Company were to be downgraded below Baa3,"
Moody's says.

TXU Europe Funding Limited is a special purpose company
incorporated in Jersey.  TXU Europe Limited, on the other hand,
is one of the largest electricity and natural gas retailers in
the U.K., with some 4.4 million power customers and 1.3 million
gas customers, says a Hoovers.com dossier.

TXU Europe owns and operates power stations in the U.K. (mostly
gas- and coal-fired facilities) with a combined generating
capacity of 3,100 MW. The company also has interests in German
distribution and supply businesses that serve about 650,000
customers, and it is involved in energy trading throughout
Europe.


TXU EUROPE: Ofgem Assures Ample Power Even If Firm Turns Off Line
-----------------------------------------------------------------
U.K. energy regulator, Ofgem, assures customers of TXU Europe
they will be serviced by other power firms should the company go
bust or unable to generate enough electricity.

The company has been rumored to be near collapse, partly due to
drastic actions taken by its U.S.-based parent, which recently
stopped a GBP450 million rescue financing.

According to Times Online, TXU Europe has GBP3 billion of debt
and GBP420 million a year in loss-making fixed contracts with
rival generators.  The European management team, led by Martin
Stanley, managing director, is still in talks with its bankers
and trading counterparties.

Six large long-term power contracts are central to TXU's
problems.  The company is understood to be withholding payment on
these contracts while it continues its talks.

Ofgem says it has already completed a trial run, which tested
transferring 2.5 million customers to so-called suppliers of last
resort.   The regulator said the tests on systems to ensure
continuity of supplies in the event of TXU Europe's collapse were
completed three weeks ago.

Ofgem says it is poised to appoint suppliers of last resort
should TXU be unable to buy or generate enough power to supply
its customers.  Under the Utilities Act, Ofgem can force a rival
to act to prevent blackouts.


TXU EUROPE: Receives Interest From British and German Investors
---------------------------------------------------------------
British and German groups are interested in acquiring TXU Europe,
a company estimated to be worth more than GBP2 billion (US$3.1
billion).

According to the Financial Times, Eon of Germany, Scottish Power
and Scottish and Southern had made informal approaches to buy TXU
Corp's European unit.

TXU Europe's ratings were recently downgraded by international
rating agencies following TXU Corp's cancellation of a US$700
million equity injection to the unit.

According to the company, the recent actions by credit rating
agencies will impact the company's ability to compete in the
European markets and accordingly may impact earnings from that
segment.

TXU Europe, in parallel with the action of its parent, is
mentioned in TXU's statement to offer for sale all or portions of
its business.

According to the report, TXU Europe executives met last week to
discuss a possible sale of all or part of the business.

Marc Wattan, utilities analyst at BNP Paribas, estimated TXU
Europe's businesses to be worth about GBP2.6 billion before power
purchase contracts.


TXU EUROPE: Top Honcho Does Not Discount Sale of British Unit
-------------------------------------------------------------
American energy firm TXU Corp. is still hoping it can salvage its
U.K. operations, although it admits that time is now running
against its wishes.

In an interview with Bloomberg, TXU CEO Erle Nye said the
contract renegotiations currently being undertaken by the British
unit must be resolved soon or else it will abandon the venture
and concentrate on its more profitable units.

He said there's an "adequate chance" TXU can keep the U.K.
operation alive.  "There's a chance, but not a great deal of
time.  We need responses this week (on power contract
negotiations.) This is not a six-month process; it must happen in
weeks, not months," Mr. Nye told Bloomberg.

He said if power-contract negotiations don't work "we'll sell and
write-off our equity."  He put TXU Europe investment at US$3.5
billion.  He said TXU Corp. can earn US$3 a share this year and
produce US$2 billion in cash flow without the U.K. operations.

"The irony is we have three strong businesses and one troubled
business. People are focused on the troubled business," Mr. Nye
said.

Asked how management missed problems at the U.K. unit, Nye said:
"The direction of prices was not a surprise... The depth and
rapidity of the decline was a surprise.  The reporting systems
were legacy systems which we acquired and did not give us early
warning."

The chief says the American parent will no longer invest up to
US$700 million in the U.K. operation to renegotiate power-
purchase contracts.   But he did not rule out a small cash
infusion to redo contracts: "If there's an opportunity to put a
finger in the dike, we'd do it.  We would have to look at it. The
negotiations are on different terms now."


TXU EUROPE: Defaults on Monthly Bill Owed to AES Corp. Affiliate
----------------------------------------------------------------
In yet another sign that the condition at TXU Europe is fast
deteriorating, U.S.-based utility TXU Corp. failed to cough up
GBP20 million to pay AES Corp. for power used in the U.K.,
unidentified sources told Bloomberg Monday.

The money due represents the September monthly bill owed to AES
Drax division.  It missed the payment for the first time in the
three years since the contract was signed, Bloomberg says. TXU
Europe spokesman Christian Judge said the company is
renegotiating its obligations and wouldn't comment specifically
on the AES contracts.

"It's not really a surprise in view of TXU Europe's condition,"
Jens Jantzen, a credit analyst at Bear Stearns in London, told
Bloomberg in an interview.

The report says TXU signed the contract to buy power from Drax --
Western Europe's biggest coal-fired power station -- before the
U.K. introduced new power trading rules that led to a 25 percent
drop in power prices in the year following their introduction in
March 2001.


U.K. COAL: Employees to Cast Vote Regarding Strike Action
-------------------------------------------------------
Miners at U.K. Coal, a company struggling against low energy
prices and international competition, are set to decide on strike
action regarding planned job cuts and the employment of private
contractors.

According to Times Online, Neil Greatrex, president of the Union
of Democratic Miners, already tapped the Electoral Reform Society
to send out ballot papers on Monday.

The fears of job cuts came as Britain's biggest coal producer
reviews its operations.  Last month, U.K. Coal registered half-
year losses of GBP12.5 million.

The result of the ballot is to be announced on November 8, and
there has yet no date set for talks between U.K. Coal and the
union, whose 2,000 members are among the coal producer's 7,000
employees.

The company, which received government aid of about GBP20 million
last year, expects to be affected by financial problems that
plagued British Energy and TXU, companies also involved in the
energy sector.

The U.K.'s 20% supplier of electricity is already shutting Selby mine
in North Yorkshire and is reviewing 12 collieries.  It is also
facing geological problems at its Daw Mill mine that is posed to
cut production until next year.

                                     **********

       S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter -- Europe is a daily newsletter co-
published by Bankruptcy Creditors' Service, Inc., Trenton, NJ
USA, and Beard Group, Inc., Washington, DC USA. Kimberly MacAdam,
Larri-Nil Veloso, Ma. Cristina Canson and Jean Claire Dy, Editors.

Copyright 2002.  All rights reserved.  ISSN 1529-2754.

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