ANALYSIS: Abbey National is no stranger to suitors but whetherBank of Ireland shareholders believe the former UK building society to be an appropriate partner remains to be seen. What is clear is that the bank isunlikely to be the only hopeful

Bank of Ireland is fighting an uphill battle in its bid to acquire Abbey National as investors in the Republic and UK remain sceptical about the merits of the deal. Yesterday's selling of Bank of Ireland shares bore testimony to that scepticism.

Based on an initial assessment of a link-up between the Republic's second biggest bank and the former UK building society analysts and fund managers are not very impressed.

The overwhelming view in the markets yesterday was that Bank of Ireland will have to produce some very compelling evidence to persuade them this takeover is in their best interests.

Abbey National shareholders are used to the bank being the focus of a takeover bid. Bank of Ireland's approach three weeks ago is the third to be presented to its board of directors within the past 12 months. Each time the deal has been rebuffed with indications now that the directors are limbering up to dismiss a union with Bank of Ireland.

The directors will discuss Bank of Ireland's proposals at the next board meeting. Just what will be on the table has not been divulged apart from a clear indication that the Irish bank is seeking to takeover the management of Abbey National and shift its primary listing to the UK.

There has been some speculation that Bank of Ireland chief executive, Mr Michael Soden, would take over the running of the UK bank with Abbey National executive chairman, Lord Burns, remaining as chairman.

Most market sources believe the fact that news of the preliminary discussions between the two chairmen has leaked does not auger well for Bank of Ireland. There is also an expectation that other bidders will soon enter the fray.

One fund manager suggested that shareholders are more confident about the beleaguered bank's prospects under the stewardship of Lord Burns.

In the past most of the criticism hurled at Abbey National had been directed at its then chief executive, Mr Ian Hartley.

He left the bank in July and Lord Burns has been working to turn the business around. This fund manager believes that Abbey National shareholders may feel that they will realise more upside from the efforts of the current management team which will be strengthened in the future with the appointment of a new chief executive.

A number of candidates have been mentioned as likely contenders to fill that position but nobody has been appointed.

The Abbey shareholders may also feel that their prospects would be brighter if the bank was merged with a larger financial institution. Bank of Ireland and Abbey National are broadly similar in size.

There is also a view that the upside for Bank of Ireland shareholders may also be quite limited. If the takeover were to succeed the bank would shift from being a strong performer in the expanding Irish economy and would become a riskier proposition.

Bank of Ireland's top priority is to enter into formal discussions with Abbey National to fully explain the rationale behind the proposed link-up but it is not off to a good start.