Strong interest is expected when bids to buy state bank ICC are lodged on Monday, although Anglo-Irish Bank is not now expected to lodge a bid, while the Republic's largest bank, AIB, will also be absent.

ABN AMRO Corporate Finance, which is advising the Government on the sale of the bank, has reported a reasonably strong level of interest from Irish and European banks in ICC. Tenders must be received by the advisers before 12 noon on Monday.

Among the Irish institutions, Bank of Ireland is regarded as the frontrunner. The Belgian-owned Irish Intercontinental Bank and Ulster Bank are also expected to submit very competitive tenders. A number of UK and European banks have also expressed an interest in buying the State-owned bank, among them Bank of Scotland, which already operates Equity Bank in the Republic. Other names mentioned as prospective bidders include Royal Bank of Scotland and the Dutch Nationale Investeringsbank, neither of which have any presence in this market. Some Irish financial institutions, which initially expressed an interest in buying the bank, have had a change of heart. The newly-merged Irish Life & Permanent has ruled itself out of the tender process. The bank's operations are considered to be insufficiently diversified at this stage to benefit from the addition of ICC's business. Anglo Irish Bank is also now unlikely to tender. AIB, never seen as likely to be a strong contender due to its existing strength in the small and medium-sized enterprise market, is also not expected to lodge a bid.

Against strong competition, and given the terms under which the Government is prepared to sell the bank, ICC could prove a very expensive acquisition. The cost is expected to be in excess of £330 million (#419.01 million), with the precise level depending on the level of interest. The new owner must guarantee to honour the terms of employment its 150 staff enjoy and must also meet onerous financial criteria laid down by the Government.

Bank of Ireland group chief executive Mr Maurice Keane has made no secret of the bank's desire to acquire ICC. Speaking to The Irish Times last month, he said ICC offers the B of I its best opportunity to expand its small business banking operations in the Republic. Staff at ICC will also have been reassured by Mr Keane's undertaking that the bank would keep the ICC brand and preserve it as a key feature if its bid was successful.

Irish Intercontinental Bank (IIB), owned by KBC, will also make an aggressive bid, as ICC's business operations would boost the bank's growing presence in that segment of the Irish market. Earlier this year, KBC raised its stake in IIB and Irish Life Finance to 100 per cent, buying out the shares held by Irish Life following its merger with the Irish Permanent.

All of the tenders will be evaluated over a two-week period and a shortlist will be compiled. Shortlisted institutions will then undertake due diligence and gain access to more detailed financial information. The advisers hope the sale can be completed in November.