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High-level talks on the banking sector are scheduled to take place between the Government and the top six banks again next week.

Finance Minister Brian Lenihan will meet the chairmen and chief executives of the financial institutions covered under the two-year state guarantee on Friday.

“The banks have been asked to consider the matters raised during Thursday’s discussions and are due to meet with the minister again on Friday,” said Mr Lenihan’s spokesman.

Irish Life & Permanent yesterday said it was talking with the EBS Building Society about working more closely in the future while Bank of Ireland revealed potential investors had contacted it but no decisions had been made.

AIB chief executive Eugene Sheehy also declined to comment on speculation about reform of the banking sector.

The Government today moved to quash speculation that Bank of Ireland and AIB would stage takeovers of the smaller institutions in a radical consolidation plan.

Meanwhile the Irish Bank Officials Association (IBOA) called on the Government to spell out its strategy on the issue to ease uncertainty for thousands of workers.

Mr Lenihan reiterated that the Government is determined to stabilise and reform the banking sector to ensure it provides credit for Irish small and medium-sized firms as well as consumers.