Merrion Stockbrokers has said figures in a report which recommended investors to sell Irish Life & Permanent shares were factually incorrect but continues to hold its view of the stock.

In a report last week, the brokers suggested that IL&P shares were over-valued and signalled that the banking and insurance group could face problems in raising money to finance future acquisitions.

Yesterday, Merrion issued a four-page correction and clarification stating that its recommendation was based on a report that contained errors. It said it had understated the firm's capital position and that incorrect figures had been used to calculate the effect of the new Basle II Capital Accord and the accounting standard to be adopted in 2005.

IL&P finance director Mr Peter Fitzpatrick welcomed the correction, expressing surprise at figures contained in the original Merrion report saying it had supplied the correct data to analysts.

"I am pleased that Merrion Capital has decided to correct the error within its original report and I am amazed at how they went to print with a report that was so seriously flawed."

Merrion accepted the firm's capital structure did not hinder its ability to raise debt finance for acquisitions. The broker also said it had misinterpreted the guidelines included in the new accounting standard, IAS.

"We misinterpreted the guidelines and concluded that the possible introduction of these could inhibit IL&P's ability to fund acquisitions solely through debt markets. The expected application of the Basle II rules to the group will have minimal impact on the group's regulatory capital requirement," according to Merrion.