The Bank of Ireland has made a preliminary approach to Abbey National about a possible merger.

But, industry insiders say Abbey, which has its regional head office in Bradford, is likely to reject the deal.

Abbey, which is the country's sixth biggest bank, has a current stock market value of around £7 billion, while the Bank of Ireland has a market value of around 11 billion euros.

The Bank of Ireland said in a statement today to the London Stock Exchange that they planned to create a London-listed bank in a merger with Abbey National with its headquarters in Dublin.

The combination of Abbey and the Bank of Ireland would create a group with a stock market value of around £14 billion pounds.

Abbey has been seen as a takeover target after bad loans led to a dramatic slump in profits this year. Its chief executive Ian Harley also recently left.

Analysts had said Abbey needed to shed up to 3,000 jobs as its restructures its costs to cope with its financial problems

Abbey, which employs more than 1,700 people in Bradford, escaped a hostile bid from Lloyds TSB last year after the Government blocked the deal on competition grounds, but city experts say the bid by an overseas firm could escape regulatory scrutiny.

Three years ago the Bank of Ireland failed in its attempt to merge with Alliance & Leicester. The deal collapsed over who would lead the enlarged group.

Abbey was also linked earlier this year to a possible bid by National Australia Bank.

A spokesman for Abbey refused to comment on any possible merger.