Bank of Ireland promised to go on the offensive to pursuade Abbey National to consider seriously its bid despite deep-seated opposition to the deal from investors.

The bank's share price took another tumble yesterday shedding another 37 cents to close at €9 as investors continued to sell the stock. Bank of Ireland shares had been trading at €10.15 before its approach to Abbey National was disclosed last week.

In a statement the bank expressed "surprise" at Abbey National's rejection of its proposed bid following a meeting of its board of directors on Monday. It noted this decision was made without any "engagement or discussion" between the two companies.

It insists that, under the terms of its proposal there would be immediate and tangible financial benefits for Abbey National shareholders and stressed it would make further efforts to re-engage with the British bank.

Abbey is understood to have strongly objected to Bank of Ireland's plans to extract significant synergies out of Bristol & West, the British-based building society owned by the Irish bank.

It is also concerned about the potential regulation of the combined group, unclear whether this would fall under the UK or Irish authorities, although Irish sources said this had been made clear and would be in Britain.

Finally, the bank is believed to have disputed the cost savings, particularly those which would have come from merging the two banks' head offices.

The former building society's shares continued to rise amid mounting speculation that National Australia Bank - parent of National Irish Bank - would attempt another bid for the company. Abbey National shares close 18p higher at £5.54 (€8.80) in London.

Abbey National was interviewing potential candidates for its vacant chief executive's position yesterday but has stated Bank of Ireland's bid is not in the interests of its shareholders.

Bank of Ireland has signalled that it will issue the details of its proposal to the stock markets in the coming days to try to win over the support of investors who have so far been unimpressed.

It is likely to offer shareholders a mixture of cash and shares, although the cash component is unlikely to be significant.

Market sources do not expect the publication of bid details to be sufficient to force Abbey's board to reconvene to discuss the bid.

Bank of Ireland's only option thereafter would be to launch a hostile bid but bank sources have indicated that this was unlikely.

Mr Piers Brown, a financial analyst at Commerzbank in London, believes it will take a substantial premium for Bank of Ireland's overtures to be taken seriously. "Hearing detail will not necessarily change fund managers' opinion that Abbey should enter talks."

He added that many investors were increasingly confused about Bank of Ireland's strategy. It has been bought as a defensive low-risk stock with an exposure to the expanding Irish economy."There is scepticism about what Bank of Ireland can bring to Abbey National, a bank which is just coming out of turmoil."

Mr John Kelly, an analyst at NCB Stockbrokers, described the bank's decision to make its offer public as a "face saving" exercise. "Shareholders are saying it is not what they want. To see your share price drop by 18 per cent on the basis of something like this is very bad."

His research suggests that Abbey National would not accept anything less than £7.35 sterling a share, which would imply a premium of around 25 per cent over its current share price.