The Lowdown: In Dublin's fair city, where bank bids aren't pretty

In stalking Abbey National, Michael Soden has aimed high ... too high for his own good. Jason Nissé reports

On Wednesday night Michael Soden was spotted dining out in an Italian restaurant in the centre of Dublin. You might have expected the chief executive of an ambitious Irish bank – and one trying to take over a larger British rival – to be entertaining his investment bankers, or buttering up a leading shareholder in his target company, or bending the ear of a politician to see how the land lay for the cost cutting that would follow the deal.

But the Bank of Ireland boss was sitting on his own, nursing a glass of red wine, prodding his tiramisu and staring into the distance. Was he collecting his thoughts for the presentation he is planning to make to the City this week to get it to back a £15bn merger with Abbey National?

Or was he wondering whether he has over-reached himself. Just seven months after taking the helm at Ireland's second-largest bank, has presiding over two failed attempts to promote transforming deals raised a question mark over his job and the bank's future?

Soden has certainly made his mark since becoming chief executive in March. Not only has he proposed a merger with Abbey National that has been rejected by the ailing British mortgage bank and is seen by most City analysts as a "non-starter", but he has tried unsuccessfully to promote both an operational and an actual merger with Bank of Ireland's main rival, Allied Irish Banks (AIB).

The naivety of both forays betrays the fact that the independently wealthy 55-year-old Dubliner is a relative newcomer not only to the politically divisive Irish business scene but also to the blood-spattered UK banking arena, despite amassing a wealth of experience in finance.

He started out working for a small Irish investment company before joining Citicorp's merchant bank in Cork. There, in the 1970s, he was spotted as a potential star of the future and left Ireland for a successful and highly lucrative career that took him to the US and Canada for Citicorp and then on to Hoare Govett, the City stockbroker bought by Security Pacific, the now-defunct Californian bank. By 1990 he had made enough money to retire. He was just 43.

However, four years getting his golf handicap down to just four was not stimulating enough for Soden, and he was tempted back into banking by National Australia Bank (NAB), where he was put in charge of its European wholesale and treasury operations. From there he was rapidly promoted, becoming number two behind Frank Cicutti.

And here comes the irony. Cicutti has been stalking Abbey National for more than a year and has had to admit defeat in the face of Bank of Ireland's move. Additionally, when he was at NAB, Soden was in effect the boss of John Windeler, the combative American who runs Alliance & Leicester, which almost merged with Bank of Ireland two years ago. And to add another twist, he was also the nominal boss of Fred Goodwin, who then ran Clydesdale Bank for NAB and now runs The Royal Bank of Scotland, which many see as Bank of Ireland's most likely suitor.

Soden was headhunted from NAB more than a year ago by the Bank of Ireland's Governor, Lawrence Crowley. Both Crowley, who took over from the high-profile Howard Kilroy after Bank of Ireland's planned merger with Alliance & Leicester fell apart, and Soden saw an opportunity for the bank to assert itself when some still see it as a relic of British rule in the republic.

Older Irish people continue to describe Bank of Ireland as a "protestant" bank. Its headquarters is in Dublin's old House of Lords and it is said that the table where the dreaded Act of Union was signed is still in the bank's vaults. It has been overshadowed by the relative success of its main rival AIB, and is now under pressure following the merger of Irish Life and Irish Permanent to create a third force in the country's banking market. Indeed, it is believed that Soden only got the job after David Went, the chief executive of Irish Life & Permanent, turned it down.

AIB became mired in scandal after John Rusnak, a trader at its US operation, Allfirst, lost $691m (£440m) in unauthorised foreign exchange trading. In the wake of the Rusnak scandal, Soden proposed a merger between Bank of Ireland and AIB – one that even on the most cursory analysis would appear impossible on anti-trust grounds.

Not daunted, Soden then said the two banks should merge their IT offices to save money. However, he had not checked out the political waterfront and when the Irish Enterprise, Trade and Employment Minister, Mary Harney, said she would refer any merger to Brussels regulators, he quickly withdrew the plan.

This week Soden intends to detail what he and Crowley proposed to Abbey National in an approach made to the mortgage bank's chairman, Lord Burns, three weeks ago. The plans are believed to be a nil premium merger, a bank run from Dublin, new initiatives on retail banking and a beefed-up treasury business. However, whatever Soden reveals, it is unlikely to impress the City.

"This is a blatant attempt by a third division team to leap into the Premiership," said one rival banker.

"Soden has a tremendous sense of his own importance, which is rather ahead of the position his bank is in," said another.

Worse still, the move has made Bank of Ireland a bid target. "We see the chances of a deal going through as slim," said Stephen Kirk of JP Morgan, the investment bank. "History suggests that Bank of Ireland has now made itself vulnerable to an approach."

The most likely bidder would be The Royal Bank of Scotland, which owns Ulster Bank. A pan-Irish merger of banks is seen as good politics in Dublin.

Ironically, another bidder talked about is NAB. Soden has used his own experiences at the Australian bank as an argument for why Bank of Ireland should remain Irish. He has pointed out that NAB bought a bank in New Zealand, a country where the whole banking system in foreign owned. He argues that this was bad for the local economy.

"If the decisions on whether to allocate resources in Ireland are being made in Rome or Brussels, I am not sure we would be very high up on their agenda," Soden told an Irish newspaper.

Does the same hold for decisions made in London, Edinburgh or Sydney?