Bank of Ireland is set to spell out details of its proposed merger with Britain's Abbey National this week, possibly as early as tomorrow.

Weekend newspaper reports suggested the proposal, which would create Europe's 11th largest bank, will include a cash sweetener of up to £1.5 billion sterling (€2.4 billion). The reports said the cash offer would run alongside an all-share merger proposal that would value Abbey National shares at a notional 750 pence or £10.9 billion sterling. Shares in the bank, Britain's sixth largest, closed at 622 pence on Friday.

A Bank of Ireland spokesman declined to comment on the reports yesterday, describing them as "totally speculative".

But the bank will move to scotch the idea in the market that its merger proposal, submitted to Abbey National chairman Lord Burns on September 19th, was a nil-premium offer.

"There is a growing and unambiguous realisation that this was never a nil-premium bid," the spokesman said.

The detailed statement from Bank of Ireland is also expected to outline how savings might be made from combining the two financial institutions.

There has been speculation that the bank is proposing to locate the merged entity's headquarters in Dublin rather than London in a bid to realise significant tax savings, due to the Republic's lower rate of corporation tax. There has also been a suggestion that Abbey National's call centre operations may be moved to the Republic to deliver further savings.