Bank of Ireland 'in merger talks with Abbey National'
Bank of Ireland is in talks to merge with Abbey National and create Europe's 12th largest bank.
The discussions are believed to be an early stage after Laurence Crowley, governor of the Bank of Ireland, approached Abbey National three weeks ago.
Abbey declined to comment on the report which comes at a time when the bank is the subject of intense speculation in the City.
It was recently linked to a tie-up with National Australia Bank while finance director Stephen Hester said in July that Abbey National remained open-minded about the possibility of consolidation.
Abbey National has rarely been out of the spotlight in recent weeks following the resignation of chief executive Ian Harley and a 34% fall in half-year pre-tax profits because of involvement in high-risk corporate lending in the United States.
There are fears that it might also be preparing to cut 3,000 jobs.
On Friday shares fell to a seven-year low after an analyst at JP Morgan warned that the bank might need to make a major write down and cut its dividend.
A combination with Abbey National would suit Dublin-based Bank of Ireland as newly appointed chief executive Mike Soden has made it clear he wants to expand the business quickly to avoid becoming a takeover target.
A tie-up valuing the new company at £15bn (€24bn) would see Mr Soden remain as chief executive and Abbey's Lord Burns stay as chairman, The Sunday Times said.
Lord Burns is currently taking on executive duties at Abbey National while the search for a successor to Mr Harley takes place.
