Bank of Ireland's 40,000 shareholders will be in line for a windfall payment if its merger with the former British building society, the Alliance & Leicester, is finalised. Under the terms of the deal which is on the table, shareholders could expect to share £550 million. The payout is being seen as a sweetener to shareholders to encourage them to vote for the merger. The bank's shares have made good progress on the back of news of the advanced talks between the two institutions and investors have been scrambling to buy up shares in the Republic's second biggest bank and the Alliance & Leicester.

A&L's shares have also been rising on the back of speculation that the deal could yet unravel and that news of the talks will serve to bring other potential bidders for both banks out of the woodwork.

Some commentators have suggested the deal is too cosy warning that another institution, such as Lloyds TSB Bank could step in and make a counter bid for A&L or another group may approach Bank of Ireland. It will be some time before the outcome of these talks is known but it does signal a phenomenal shift in the future-ownership of Irish banks. The deal firmly puts the spotlight on all Irish financial institutions and heightens the attractiveness of these stocks for investors.