Shares in Irish Permanent and Irish Life rose strongly for the second successive day in Dublin and London as investors continued to respond positively to the merger between the two financial services groups, writes Brendan McGrath.

Irish Permanent shares, which will be swapped for Irish Life shares under the all-paper merger deal, were in particular demand, boosted by a presentation to institutions in London by executives from both groups, as well as a possible upgrade by ratings agency Moody's.

Demand was also boosted by a belief that the merged Irish Permanent & Life will qualify for the Eurotop-300 index, a key measure for institutional investors in the post-euro investment environment. In Dublin, Irish Permanent shares were up 33p to 990p while Irish Life was 10p higher on 610p.

At Irish Permanent's closing price, the merged group has a notional market value of £2,849 million based on the 287.8 million shares that will be issued when the merger is completed.

Moody's put Irish Permanent under review for a possible upgrade. The agency said that the merger would improve Irish Permanent's business strength "as it would offer the bank new cross-selling opportunities, most notably in bancassurance".

"Following the merger, the new entity would attain more sizeable market share in the sale of retail financial products, thereby strengthening Irish Permanent's competitive position in the highly consolidated Irish banking industry," Moody's says.