Irish Life and Irish Permanent have formally merged and will begin trading as Irish Life & Permanent on the Dublin and London stock markets today . The merger is the Republic's largest corporate deal to date and creates a financial services group with a market capitalisation of €4.2 billion (£3.3 billion).

Announcing the completion of the transaction yesterday, group chief executive, Mr David Went, said its mission was to become the Republic's number one provider of financial services in the retail market. The merger was greeted with an upgrading from the Moodys credit rating agency to A1, indicating the group has a strong franchise and strong financial fundamentals. Irish Life shareholders will be issued with new Irish Life & Permanent shares but Irish Permanent shareholders will retain their original shares, which will be part of the new group. Irish Permanent chief executive, Mr Roy Douglas, stepped down from his position to become chairman elect and executive director with responsibility for integrating the two businesses. The merger was announced last year. It brings the group's total assets to £17.6 billion. Its combined premium income amounts to £1.25 billion with after-tax profits of £186 million.

Some 75 per cent of its profits are earned in the Republic, 4.7 per cent in the UK, 9.6 per cent in the US market and 10.7 per cent in other investments.

Irish Life & Permanent is in discussions to sell its stake in Irish Life Home Loans, Irish Intercontinental Bank and K&H bank in Hungary to Kredietbank. Irish Life owns 24 per cent of K&H which operates in a market which is increasingly popular with Irish and international banks. Mr Went insists, though, that it is now "illogical" for the merged group to retain that shareholding. The first major task for Irish Life & Permanent is to integrate the two businesses and begin to realise cost savings of around £12 million.

The bulk of these cost savings will be realised through the elimination of the duplication of various functions throughout the group. The remainder is expected to be realised through its improved ratings which will allow it to borrow money more cheaply in future.

Mr Went refused to forecast the group's future progress in terms of gaining market share but expects to be able to increase its business and benefit from the estimated 15 to 20 per cent overall growth in that market in 1999.