Lloyds mulls tie-up for Irish unit BOSI -report

Lloyds Banking Group's Irish unit, Bank of Scotland (Ireland), wants to participate in a potential merger to create a "third force" in Irish banking, the Irish Times reported on Friday.

"We never comment on market rumour or speculation" a Lloyds spokeswoman said in response.

The idea of a "third force" to compete with top lenders Allied Irish Banks and Bank of Ireland has repeatedly surfaced in Irish media, and the possibility was also raised this week by the bank workers' union.

According to the reports, the merger would unite Permanent TSB, the banking arm of bank assurer Irish Life & Permanent, with building societies EBS and Irish Nationwide.

The Irish Times said Bank of Scotland (Ireland) has signalled to the government that it wanted to join the group, which would be formed after the reorganisation of the sector due to the establishment of Ireland's "bad bank" this year.

BOSI could take a 20 percent stake in the new group in amove that could also pave the way for Lloyds' eventual exit from the Irish market, the newspaper said, without naming its sources.