Irish housebuilder Abbey has warned British high-street bank Abbey National to reverse plans to drop the word "National" from its name or face the prospect of legal action.

Abbey managing director Mr Charles Gallagher is furious at Abbey National's rebranding strategy, believing that it will lead to the public confusing the two groups.

He made his feelings clear to Abbey National chief executive Mr Lugman Arnold in a telephone conversation and is now taking legal advice.

"He feels Abbey National has behaved in a high-handed and unethical manner and will in effect be passing itself off as Abbey," said a spokeswoman for the builders, which is listed on both the Dublin and London stock exchanges.

It is understood Abbey National, which is listed just on the London Stock Exchange, will be told to revert to its original name in a letter from Abbey solicitors next week.

Mr Gallagher was prepared to go to court to protect the company's identity, said the spokeswoman.

"At this stage, only legal advice is being sought. But whatever needs to done then will be done. Mr Gallagher is quite determined not to let this rest," she added.

However the UK mortgage provider, which is changing name as part of a €15 million relaunch, dismissed the protests, saying the companies are engaged in entirely distinct activities.

It has registered the name "Abbey" as a bank and believes Mr Gallagher's allegations that it will, in effect, be passing itself off as Abbey are without foundation.

"Our legal advisers tell us there is no basis to these claims. Abbey National provides financial services and Abbey builds houses. It is absurd to think anyone could confuse the two," said a spokesman.

There are overtones of David versus Goliath with Abbey's market capitalisation of €216 million overshadowed by Abbey National's €11.1 billion valuation.

The controversy could not come at a more inconvenient moment for the British group, which hopes a change of name will reverse its plummeting fortunes.

It has hired brand consultants Wolff Olins, the group behind names such as Marbles, Goldfish and Orange, to spruce up its image.

The company says it wants to move away from the perception that banks are "patronising, bureaucratic and overbearing." In the past, the former building society has been dubbed "Shabby Abbey" for its allegedly substandard approach to customer service.