With the London takeover talk finally fizzling out, bank shares fell heavily on the Dublin and London markets yesterday. The negative tone was fuelled by a downgrading of both banks by London securities house Credit Suisse First Boston.

While there are still some in London who fervently believe that AIB is in the firing line for a bid, there is a growing realisation that the movement in AIB and Bank of Ireland shares in the past week has been driven more by market-makers playing their own book rather than any realistic prospect of a bid for AIB from Deutsche Bank or Lloyds TSB.

AIB closed down 50 cents on €16.70 (£13.15), while Bank of Ireland was down 95 cents on €19.80 (£15.59). Dealers said turnover was "reasonably heavy" but lower than when the shares were rising at the peak of the takeover frenzy.

In London, more than 2.3 million AIB shares traded as the shares fell 22 1/2p (32 1/2 cents) to £11.80 sterling (€17.12), while almost one million Bank of Ireland shares dealt as the shares fell 79 1/2p (€1.15) to £13.60 sterling (€19.73).

Irish Life and Irish Permanent both lost ground in response to the weakness of the big banks. Irish Life fell 31 cents to €8.49 (£6.69), while Irish Permanent was 40 cents lower on €14.10 (£11.10). With London losing all of its early gains in response to a weak opening session on Wall Street, CRH came off its high and lost 35 cents to €15.65 (£12.33). Elsewhere, Clondalkin regained recent lost ground with a 30 cent jump to €5.30 (£4.17) and Fyffes was five cents firmer on €2.40 (£1.89) after recent share buybacks, while Kerry fell 45 cents in thin trading to €11.00 (£8.66). Smurfit continued its recent improvement and, for the second successive day, rose strongly with an eight cent gain to €1.63 (£1.28).