A state sell-off of the ACC and ICC banks should create substantial interest and raise a significant cash fund for the Government. For the banks, sales should mean more ready access to capital to back future growth and development.

ICC with its focus on the small business sector and venture capital will be of interest to bidders who want to build up a quick presence in this area as well as those wanting to expand their market share. Potential domestic bidders include Irish Permanent and National Irish Bank and there has been some foreign interest.

In a full sale, the bank could generate £110 to £120 million, using a price earnings ratio of 14 to 15 times historic earnings. But other options will be considered including a strategic partnership with either a domestic or foreign partner in which the State would retain a minority stake.

ACC, which has expanded from its roots in the agriculture sector to become a more broadly-based retail bank, could raise £140 million to £150 million on a similar price earnings rating.

ACC's preferred strategy is a takeover by, or strategic partnership with, a well-capitalised foreign bank.

In the past Credit Agricole has shown strong interest in ACC and there have been expressions of interest from Dutch and German banks.

However, a final move on the two State-owned banks will leave the issue of the TSB still unresolved just under four years after the trustees first approached the Government seeking approval for the takeover of the bank by National Australia Bank.