Take-over speculation looks set to continue to surround AIB, despite the belief in senior sources in the investment community here that an early move on Ireland's biggest bank is most unlikely. A British newspaper report yesterday said that Deutsche Bank, the leading German bank, was examining a bid for AIB, following a week of rumours and counter-rumours about the bank.

The Mail on Sunday newspaper said that Deutsche was considering a £12.5 billion sterling (#17,72 billion) friendly bid for AIB - in other words one that would have the support of the AIB board, attracted by AIB's UK interests as well as its presence in Ireland.

An AIB spokeswoman said that it was policy not to comment on market speculation, while agency reports said that Deutsche Bank also declined to comment.

However, sources in Dublin pointed out that the Deutsche report was the latest in a line of speculation about AIB, which has also been linked with other overseas banks and itself is seen as a possible bidder for the Portman Building Society in the UK.

They believe, however, that the current high level of share prices for the main Irish banks makes them a relatively unattractive take-over candidate in the short term for an overseas institutions such as Deutsche. AIB's share price has risen strongly in the opening weeks of the year, although analysts in Dublin believe this is due more to its inclusion in indices of leading stocks in the euro zone, rather than to an early expectation of a take-over approach.

(# - Euro)