Bank of Ireland shares fell heavily for the second successive day on the Irish market on the basis of investors' continued negativity about the bank's recent cut in its mortgages rates.

The decline was also fuelled by speculation that other British banks may follow Bank of Scotland into the Irish market and offer further financial products that will compete with the Irish banks.

Bank of Ireland fell 40 cents to €7.60 (5.99), following its 55-cent fall on Monday. It has now fallen by more than 11 per cent in the space of two days, with in excess of €976 million (£770 million) wiped off the stock market value of the bank. In contrast, AIB managed to halt its losses and closed on €11.45 (£9.02) - mainly due to its lower exposure to the Irish economy.

While AIB derives 47 per cent of its profits from Ireland, with the balance coming from the US, UK and Poland, Bank of Ireland is more firmly rooted in the domestic economy, with more than two-thirds of profits coming from Irish operations.

Analysts said that the market has taken the view that Bank of Ireland is more exposed by challenges from overseas to its domestic operations, especially if other British banks follow Bank of Scotland and begin offering other financial products such as car loans, better savings rates and life assurance/investment products.

Irish Life & Permanent, despite results that came in ahead of the market's expectations, was 20 cents lower on €9.40 (£7.40).

First Active lost another 10 cents to €2.90 (£2.28).