Bank of Ireland is once again being linked with a major building society acquisition in the UK. The Portman Building Society in the south of England has been mentioned as a possible target.

Analysts believe that Portman could command a price tag of £450 million to £500 million sterling.

Bank of Ireland and Portman have refused to comment on the speculation of a bid, but the bank has never made any secret of the fact that it sees an expansion of its mortgage business in the UK as one of its main growth areas.

Bank of Ireland has a substantial presence in the British mortgage market since its £600 million acquisition of Bristol & West Building Society two years ago, an acquisition that has been hugely successful for the bank. Inevitably, when British building societies are mentioned as potential takeover candidates, Bank of Ireland is one of the first names to be put in the frame as a potential bidder, and for that reason some analysts are treating the Portman speculation with some caution.

One analyst said that corporate activity involving British building societies is likely to be low-key for the next year or so, until it becomes clear what will happen to the Nationwide, Britain's biggest building society. Nationwide members recently voted narrowly against demutualisation, but there is a strong view that the narrowness of that vote leaves the Nationwide open to a bid from one of the big British banks.

"If the Nationwide does go as a result of a bid, smaller building societies will undoubtedly follow," he said, including mid-sized societies like the Portman and Chelsea.

While Portman has been seen in the past as being one of the strongest advocates of mutuality among British building societies, the decision this year to retain profits rather than distribute to members in the form of a loyalty bonus, lower mortgage rates or higher savings rate, was interpreted by many as a preparatory move towards demutualisation. Portman had profits of £41 million sterling in that financial year.

If Portman does decide to demutualise, analysts say a sale to a company like Bank of Ireland is most likely, as Portman is probably too small to float on the Stock Exchange. One analyst said that Portman has a mortgage book about half the size of Birmingham Midshires - itself being acquired by Halifax for £780 million sterling - but that its better quality mortgage book might value Portman at £450-£500 million sterling.