The market has reacted with scepticism to suggestions that Bank of Ireland is a potential bidder for Alliance & Leicester (A&L), the British mortgage bank with which Bank of Ireland had abortive merger talks two years ago.

Yesterday, US broker Prudential Bache included Bank of Ireland in a list of potential bidders for A&L.

This list includes National Australia Bank, Abbey National and Lloyds TSB. A spokesperson for Bank of Ireland declined to comment on the report.

Analysts in Dublin said they would be astonished if Bank of Ireland had made any sort of a merger for A&L, not least because of the acrimonious end to the merger discussions two years ago. Back then, Bank of Ireland came in for severe criticism for the terms of the proposed merger, not least the proposal that A&L would provide the chief executive for the merged bank although it was the much smaller entity.