Industry watchers have said a combined effort would allow Bank of Ireland to increase its presence in Northern Ireland, while Irish Life & Permanent would assume control of operations in the south. This arrangement would allow Bank of Ireland to avoid a challenge from Irish competition authorities for dominating too much of the market. And it's known that Irish Life & Permanent would want to expand its branch network in the south, something it could easily do by buying Ulster Bank. Additionally, Irish Life & Permanent's chief executive, David Went, was chief executive of Ulster Bank in the early 1990s.

Ulster Bank isvalued at about 2.7 billion euros and is being sold by NatWest as part of the U.K. bank's strategy to fend off a hostile bid from Bank of Scotland Plc. Analysts say a bid of such magnitude would likely involve some sort of fund-raising exercise on the part of both bidders. The closing date for offers to buy Ulster Bank is Nov. 11.

-- The Wall Street Journal