National Australia Bank (NAB), which owns National Irish Bank (NIB), is reportedly attempting to acquire British bank Abbey National.
National Australia Bank is thought to be in the early stages of putting together a swoop for Britain's sixth largest bank.
The Financial Timesreported today that advisers for both sides had held exploratory talks, with NAB discussing the matter with its investment bank Goldman Sachs. Neither bank has commented on the speculation.
However, the rumours were strong enough to send Abbey's shares 4 per cent higher in a depressed market yesterday.
NAB already has a presence in the UK with the Clydesdale, Yorkshire and Northern Banks but could quadruple its customer base in Ireland and the UK to 20 million through the merger. National Irish Bank is also part of its portfolio.
Abbey National, which issued a shock profits warning earlier this month, has been increasingly seen as a takeover target.
NAB has not made a secret of its aims to expand in the UK and has also been tipped in the past to bid for banks such as Alliance & Leicester.
The Melbourne-based operation was recently listed as the world's 20th largest financial services company in terms of profitability. It has more than eight million banking customers and nearly three million wealth management clients.
PA