The market has grown accustomed, in recent years, to unpleasant surprises from the telecommunications and high-tech sector. But when a solid, blue-chip mortgage lender like Abbey National issues an unexpected profit warning, investors sit up and take notice.

The British high street bank shocked the market during the week when it warned that pre-tax profits for 2002 would be "substantially lower than current market expectations, and last year".

Much of the blame fell on its wholesale banking division, which consists of treasury, foreign exchange and derivatives, with provisions expected to exceed last year's £265 million sterling (€412 million) write-off.

Abbey National's troubles have highlighted the risks facing wholesale banking, once a highly profitable division for many institutions but one which has been beset with problems since the US economy slid into recession last year.

In an Irish context, attention has focused on Bank of Ireland which has been expanding this arm of its business aggressively in recent years.

According to Davy Stockbrokers, it had an estimated €3.6 billion international bond portfolio and €4.6 billion of international loans as of last March, areas causing problems at Abbey.

"We think the market needs some reassurance that this business is a worthwhile use of shareholders' capital," says Davy, ironically a part of Bank of Ireland's wholesale division itself.