Anglo Irish Bank and Irish Life & Permanent (IL&P) are the financial institutions most likely to be subject to an overseas takeover, according to analysts.
In the wake of last week's surprise acquisition of First Active by Royal Bank of Scotland (RBOS), Davy stockbrokers said a takeover of either company was "possible", with UK banks such as HBOS and Lloyds TSB among the foreign players that may be sizing up Irish purchases.
Management at both Anglo and IL&P are on record as having no objection in principle to being acquired and their bolt-on nature would make them ideal targets for British banks with few expansion opportunities in their domestic market, according to the brokers.
"We are convinced we will see more deals over the next few years," said Davy in a market comment. "In the absence of a sharp economic downturn, the attractions of the Irish market are obvious, notwithstanding its small scale."
Given that it is eager to build its presence here, HBOS is a leading candidate for expansion. Either Anglo or IL&P would sit well with its business mix, as would Bank of Ireland, according to Davy.
Lloyds TSB may also be turning its gaze to the Republic and could have a particular interest in IL&P and Bank of Ireland but is "not flush with capital". Barclays might target Anglo and possibly AIB, although probably over the longer term.
National Australia would do well to either exit the Republic or "bulk up" its 2 per cent share of the lending and deposit market, said Davy. Fresh from its First Active takeover, RBOS is unlikely to consider further acquisitions in the short term, it added.
