Bank of Ireland PLC, Ireland's largest bank, said Monday it is considering a merger with Alliance & Leicester PLC, a British mortgage bank.

A merger would constitute a bold step for Bank of Ireland, which has until now operated mainly within the Irish market. It would also accelerate a trend toward in-market consolidation in Europe, where large Spanish, German, and Scandinavian banks have merged since the start of the year, and France's Banque Nationale de Paris has proposed a trillion-dollar merger with Societe Generale and Groupe Paribas.

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