Two major UK banks, Lloyds TSB and HBOS, are understood to have an interest in acquiring the life business of Irish Life & Per­m­anent (IL&P) if it comes up for sale as a result of bank consolidation talks led by the Irish government.

It is understood regulators and the government have discussed in general terms the idea that Irish Life & Permanent (IL&P) might have to be split up if the credit crisis worsened in the period ahead. Lloyds TSB currently has no presence in the life market in Ireland.

The potential release of over €1bn from the reserves of IL&P's life division is starting to trigger interest from potential buyers.

It is understood Lloyds and HBOS representatives in the UK have been made aware that IL&P's life business might become available. HBOS already has two brands in the Irish market, Halifax and Bank of Scotland (Ireland).

It is understood representatives of these companies have been asked to keep their parents informed of any developments with IL&P's life business.