By Andrew Bushe
DUBLIN — Discussions about a possible merger between the Irish Life and Irish Permanent are under way in what could be the biggest Irish corporate tie-up deal ever and lead to the creation of a major third banking force.
A merger between Irish Life, the state’s largest insurance company, and Irish Permanent, the largest mortgage bank, would create a £2.4 billion company that would challenge Allied Irish Bank and Bank of Ireland.
The talks between the two market leaders were confirmed to the London Stock Exchange on Monday.
The boards of both companies have authorized the discussions between teams led by chief executives Roy Douglas of the Irish Permanent and David Went of Irish Life.
The merger of the fifth and eighth largest companies on the Irish stock market would dovetail their operations to make it a major player in the personal finance market and protect them again predatory takeover bids.
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Irish Permanent went public four years ago and is open to takeover from next year when a rule forbidding any shareholder from holding more than 15 percent of shares lapses.
Went took over in Irish Life earlier this year and has been keen to establish a banking presence.
If the preliminary talks develop, a deal would have to be cleared by the Competition Authority and by Minister for Finance Charlie McCreevy, who holds a "golden share" in the former state insurance company. Shareholders would also have to vote an any merger proposals.
Meanwhile, there is speculation that the huge British mortgage lender Abbey National will move in to acquire Irish Life and the Irish Permanent if and when they merge. Abbey National, which already owns nine percent of Irish Permanent, could also launch a hostile bid for the companies even before they reach a merger agreement.