Clear signals about Bank of Ireland's future direction are what the market will want to see from the group when it reports interim figures next week. Its shares have not really recovered from the disastrous attempt to merge with Alliance & Leicester and the question marks that strategy placed over the policy direction of the board and top management.

But with the sudden dismissal of Peter White from A&L - the mooted chief executive of a merged Bank of Ireland/ Alliance & Leicester - the question is whether Bank of Ireland will try to reopen merger or even takeover talks.

Strong interim numbers are expected from the bank against a background of a buoyant domestic economy. But of much more concern now is how it plans to make its surplus capital generate strong returns for shareholders.

The market would be less than happy with any reopening of the A&L talks. Some comfort is being taken from the fact that A&L is continuing to repurchase its own shares - something it could not do if it was in merger talks.

Bank of Ireland is now on a prospective price earnings ratio of 10 compared with 14 for A&L, making the British bank an expensive partner - both banks were on prospective p/e's of 16 at the time of the leaked merger talks.

What the market would like to see Bank of Ireland do is acquire the Ulster Bank operation in Northern Ireland. Such a deal would put Bank of Ireland on a par with Northern Bank, would use up surplus capital and could be immediately earnings enhancing at the right price. But the question of longer-term strategic direction would remain.