Lloyds TSB has refused to confirm or deny rumours that it is in merger talks with Dutch-Belgian financial group Fortis.

Chief executive of Lloyds TSB, Peter Ellwood, said the bank would concentrate its efforts on forging a European partnership after its £18.5bn bid for Abbey National was blocked by the government.

In a statement, the bank said: “We will continue to focus on delivering value for our shareholders through organic growth and acquisitions.”

Fortis is a major player in the European insurance market and, in 2000, attracted premiums of £9.6m. It has a market capitalisation of £24bn, compared with Lloyds TSB's £37bn.

A Fortis spokesman said general talks were taking place between everyone on the consolidating banking sector but declined to say if there was any specific deal being negotiated with Lloyds.

“There are talks going on, but this is a continuous process,” he said.

Analysts said while a merger between Lloyds and Fortis was possible, it would make little sense in terms of strategy, with Lloyds and Fortis hardly present in each other's markets.