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Bank of Ireland sounds Abbey National for merger

London, Oct. 7: The Bank of Ireland has approached Abbey National of Britain about a potential merger, people close to the discussions said Sunday.

Abbey National is considering a response, the people said, while warning that the discussions were in the early stages and might not lead to a deal.

Abbey National has come under pressure because of an increasing number of bad loans that have hurt earnings. That poor performance led to the resignation of Ian Harley as chief executive this summer. Lord Burns, the chairman, has been running the bank while Abbey National looks for a successor.

People close to Abbey National said the bank was hesitant about rushing into a merger without a chief executive while its share price remained depressed. The stock has dropped 28 per cent since Harley made his resignation public on July 19 and is down 48 per cent this year.

The Bank of Ireland, led by Michael Soden, the chief executive, has made no secret of its desire to expand. The Bank of Ireland was named as a possible suitor after Allied Irish Banks saw its stock drop after fake trades were uncovered at its American subsidiary, Allfirst Financial. But analysts said such a combination would face antitrust issues. If the two agree on a merger, the combination would create a bank with a market valuation of about £17.6 billion ($ 27.5 billion), making it one of the 12 largest in Europe.

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