Anglo shares are currently trading at about nine times expected current year earnings, a discount of about 20 per cent on the ratings of the two main banks.

While Anglo has produced strong results in recent years and has built up a profitable portfolio of operations through acquisition, its share price has languished somewhat behind these developments.

The bank is not helped by its relatively small size in the financial sector and by the perception of foreign investors that its profits are too highly exposed to the Irish economy.

Anglo's latest plan is the setting up of an insurance operation. This is a strategic move to ensure that it will be able to offer its depositors the financial products they want. The move is aimed at ensuring that Anglo will be able to hold on to its existing depositors by offering them the range of savings and investment products they want. And it will boost non-interest income.

With the blurring of the traditional demarcation lines between banks and insurance companies, banks without life assurance operations are in danger of losing significant chunks of the deposit base to products offering better returns.

This trend is accentuated in the current low-interest rate environment where returns on some deposits are barely keeping pace with inflation and because of the increasing sophistication of investors.

If the move goes according to plan, Anglo expects the new operation to contribute about 10 per cent of group profits within three years. The bank is taking a targeted approach. It will only offer savings and investment type products that are close to its own existing deposit and investment banking products. It is steering clear of the more traditional life assurance policies.

But the areas targeted are expected to be fast-growing and lucrative. Anglo will be competing with existing large players such as Irish Life and Permanent and the life assurance subsidiaries of the banks for pensions business.

With relative low existing occupational pension coverage, growth in that market is expected to be about 15 per cent to 16 per cent per annum over the next five years.

Anglo does not have the advantage of a branch network through which to sell.

Pending the receipt of a licence to sell insurance from the Department of Enterprise and Employment and approval from the Central Bank, the bank already has one required leg of a life assurance operation in place with the funds management businesses in Ireland and Austria, acquired last year.