Investors taking a gamble on First Active helped to push the share price up 16 per cent to €2.32 yesterday.

The shares, which traded slightly stronger on Friday, continued to improve in Dublin yesterday as small investors bought in. Investor interest is based on the belief that First Active's shares are now trading at rock bottom and offer the potential to make gains going ahead.

First Active has taken a hammering in the market on concerns about its ability to withstand competitive pressures in the Irish market, particularly from Bank of Scotland.

First Active has responded with the introduction of an aggressive cost-cutting package which involves branch closures and 175 job losses. It is also currently seeking to recruit a new chief executive to replace Mr John Smyth, who resigned last week. Investors are hoping these development will help to reverse First Active's fortunes while the prospect of the bank eventually being taken over or forging an alliance with another institution also offers some growth potential in the share price.

Many analysts have been recommending the shares as a buy at current levels, although just how much progress the shares can make in the short term will depend on the calibre of any new chief executive and the future strategy adopted by the bank.

Goodbody Stockbrokers yesterday issued a buy recommendation for First Active. Analyst Mr Oliver O'Shea has upgraded his forecasts for profit growth at the bank for this year and 2001 to take account of cost savings and continuing strong fundamentals in the mortgage market. The brokers expect First Active to focus on developing an Internet delivery channel and becoming a specialist mortgage provider. Shares in the former building society were floated at €3.06 in October 1998.