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The initiative – which will cost BoI £135m – will see the Post Office sell the bank’s products through its 16,500 branches.While margins will be wafer-thin on the loans, insurance and credit cards which will be sold under the arrangement, BoI predicts that volumes will be such that it will add £200m to profit within five years. The ill-fated move left the City thinking BoI’s management was more like a bunch of extras from Riverdance than an emerging force on the banking scene.Since then, the group has done much to restore confidence in the Square Mile, including signing a joint venture with the Post Office. The shares, at 1,402p, remain a core holding.Despite its missteps, BoI is worth holdingFor many people, Bank of Ireland is best known for its attempted opportunistic swoop on larger rival Abbey National in 2002. EPS will still grow by strong double-digits this year.The group may need a makeover in the medium term but its expansion story is not over. And at the end of next year, the company will embark on its riskiest venture yet: an 80,000 square foot store in the Arndale Centre in Manchester, which will be nearly twice as large as its biggest existing site.However, with the management as fixated on increasing its earnings per share as its sales, there is little real risk to the group’s financial health. But that didn’t stop some analysts from upgrading their forecasts.Given the group’s decision to increase its net selling space by 17 per cent – or 480,000 square feet – this year, there is always the risk that the enlarged stores will take a bigger than expected bite out of its sales.

Simon Wolfson, the chief executive, cautioned that the group was only 14 weeks into a “very long year”. Total retail sales have risen by 17 per cent so far this year while sales from its Directory climbed 13 per cent.The rise in sales outstripped internal expectations, which have factored in a fall in like-for-like sales this year to the bottom of its 2 to 4 per cent range. Hence its like-for-like sales growth tends to look sluggish, at best.
But the 3.1 per cent rise in like-for-like sales that it unveiled yesterday more than soothed City fears that even the mighty Next was finding trading tough. Its aggressive policy of expanding old stores and opening larger out-of-town sites depresses its underlying sales growth because the new sites cannibalise existing ones. Next is used to being on the losing end of the stock market’s obsession with like-for-like clothing sales. Chris Gibson-Smith is the non-executive director at British Land who is running the search for a chief executive.Nick Ritblat, the son of John Ritblat, had previously been hotly tipped to get the job.

The younger Mr Ritblat is already an executive director at British Land. Although he applied for the position initially, it is thought that he had withdrawn his candidacy before the company settled on Mr Yea.Analysts said that while the failure to fill the chief executive job was deeply embarrassing for the company, British Land was performing well operationally, as its key market in the City bounced back.. British Land said: “The board had identified a suitable candidate and thought that it had settled detailed terms with him but, very much to the board’s regret, he yesterday [Wednesday] informed us that he had decided to withdraw for reasons not connected with British Land.”The company, which is using the headhunters Whitehead Mann to fill the position, will now have to begin the recruitment process again. However industry sources said it was Mr Yea, the former finance director of Diageo, the drinks groups, suggesting that he had been offered another position that he found more attractive. Derek Higgs, who drew up the most recent corporate governance code, sits on British Land’s board.The company put out a statement yesterday but declined to identify the candidate who turned it down at the last minute.