In this paper, we consider a kind of coupled nonlinear problem with Signori
ni contact conditions. To solve this problem, we discuss a new coupling of
finite element and boundary element by adding an auxiliary circle. We first
derive an asymptotic error estimate of the approximation to the coupled FE
M-BEM variational inequality. Then we design an iterative method for solvin
g the coupled system, in which only three standard subproblems without invo
lving any boundary integral equation are solved. It will be shown that the
convergence speed of this iteration method is independent of the mesh size.