Shares in Abbey National had risen a further 7 per cent by lunchtime as the market waited for the next move by Bank of Ireland, whose initial informal merger approach was rejected by Abbey.
Speculation that National Australia Bank may also reconsider a bid for the British mortgage bank further underpinned Abbey's share-price, despite a statement by the Australian bank that it had approached Abbey with a view to an offer but discussions had ceased without any agreement.
"Hopes that either NAB or BoI will come back with new proposals are running high and are likely to boost Abbey's share-price for a while," said one dealer. "There are even hopes that a UK player might enter the fray despite the failed Lloyds bid for Abbey," he added.
Bank of Ireland yesterday said it provided Abbey with sufficient detail of its intent, of the tangible and immediate financial benefit that would accrue to Abbey shareholders, of the significant synergies that could be realised, and of the structure of a combined entity, to merit meaningful engagement and consideration in the interests of its shareholders.
The Bank of Ireland said it was "surprised" that Abbey turned down the proposal without any discussion between the two companies.