Merger talks between Irish Life and Irish Permanent are making good progress with the boards of both financial institutions expected to approve the deal early next month.

A number of working groups, comprising representatives from both organisations, are currently examining the structures and business mix across both companies, to establish a blueprint for how the merger will work in practice. The new management team is also expected to be announced in the coming weeks.

Irish Life and Irish Permanent shares both rose in value this week, with the market signalling that the merger is virtually a done deal. Irish Life's share price traded up 10p on Friday to 580p, while Irish Permanent rose 20p to close at 920p.

The talks, which began in October, are said to be making good progress and are likely to be concluded within the next couple of weeks. Both sides are mindful that the process must be formalised before the year end, mainly for investor relations reasons.

The financial institutions are also working with their advisors to establish the respective valuation to be put on both companies and the precise structure of the deal. Irish Permanent is being advised by the London corporate finance advisors, DLJ Phoenix, while Schroders is acting for Irish Life. In a statement, both companies have indicated that the transaction will be concluded on terms broadly in line with recent relative market capitalisations of Irish Permanent and Irish Life. Irish Life is valued at roughly £1.6 billion on the stock market while Irish Permanent is valued at around £800 million.

Following board approval, Irish Permanent will have to make a formal bid for Irish Life. It will have to call an extraordinary general meeting of shareholders to consider the proposal, which is likely to be convened in January.

Irish Life shareholders, meanwhile, will also have to consider Irish Permanent's bid for the institution and approve it.

Subject to board approval, both companies will begin a series of presentations to analysts, fund managers and institutional investors to persuade them of the benefits of the deal.

The various sub-committees are currently evaluating the impact of the merger on sales and profits and are seeking to identify synergies between the two businesses which will be highlighted to the institutions.

The deal offers a number of revenue and cost benefits, but is likely to lead to some job losses and a winding-down in already established relationships.