Bank of Ireland denies Santander approach

By Jonathan Saul and Judy MacInnes

DUBLIN/MADRID (Reuters) - Bank of Ireland (BKIR.L) on Friday said it had not been approached by any potential buyers, following a media report that it was being eyed by the eurozone's largest bank Santander (SAN.MC).

"Bank of Ireland notes recent media speculation and categorically confirms that it has not received an approach from, nor entered into discussions with, Banco Santander or any other party," Bank of Ireland said in a statement.

Bank of Ireland shares were almost 46 percent higher at 1307 GMT shortly after the statement, amid general banking sector euphoria on hopes for a U.S. taxpayer-funded plan to mop up toxic mortgage-related debt. Santander was 13.4 percent higher.

Irish radio station Newstalk had quoted senior market sources as saying the Spanish bank, whose international reach and relatively cautious lending during a property boom has left it in a strong position, was considering the bid.

A Santander spokesman declined to speak about Bank of Ireland, whose exposure to a property market collapse in its home market has seen its shares tumble during the hurricane shaking world finance.

The Santander spokesman also refused comment on a report on the Financial Times Website that the Spanish institution was considering bidding for U.S. bank Washington Mutual WM.N.

"Buying Washington Mutual makes much more sense for Santander than the Bank of Ireland, because it could use Washington Mutual's branches to sell its consumer finance products ... There would be some substantial synergies in that sense," Renta 4 analyst Nuria Alvarez said.

The FT cited people familiar with the matter as saying that five banks including Santander have come forward to evaluate WaMu's financial records as part of an auction run by the Seattle-based savings and loans company's adviser.

Apart from Santander, JPMorgan Chase (JPM.N), Wells Fargo, Citigroup (C.N) and HSBC (HSBA.L) are looking at WaMu's books, the FT said.

Washington Mutual has a market capitalisation of $3.4 billion compared with Santander's $89.2 billion, according to Reuters data. Bank of Ireland has a market capitalisation of $5.5 billion.

Sebastian Orsi, analyst at Merrion Landsbanki, said Bank of Ireland's strong position in its home market and UK operations, including business banking and mortgages, meant it had something to offer a potential buyer.

But the current state of global markets and relatively small size of the Irish market meant a bid from a big global banking player seemed a distant possibility at present.

"I wouldn't say it is an impossibility but I would be surprised if there were to be a bid," Orsi said.

SANTANDER'S AMERICAN AMBITION

Santander's U.S. growth ambitions have been limited to its just under 25 percent stake in Sovereign Bancorp Inc and a foray into consumer finance with the purchase of Drive Financial, specialising in auto financing.