The five-year ban on any shareholder owning more than 15 per cent of mortgage bank First Active comes to an end tomorrow and opens the possibility of a takeover.

At the time of the demutualisation of First National, as it was known five years ago, the ban was imposed to prevent an immediate takeover of the new company. The ban is stipulated in the legislation governing building societies.

A First Active spokesman said it would not comment on whether it had been approached regarding a possible takeover.

Some sources in the financial sector said they considered it unlikely that an Irish-owned bank would seek to buy First Active. Others said the opposite.

One source said First Active could be bought by someone who wanted its branch network - such as Bank of Scotland Ireland or IIB Bank - or could be bought by someone who already had a branch network and would be able to close the First Active network in the wake of its acquisition.

That analysis would mean that every bank in the marketplace is a potential purchaser, though competition law may rule out bigger players such as AIB, Bank of Ireland, and even Irish Life & Permanent (IL&P). Few sources are expecting an early bidder for the bank.

"I haven't heard of anyone being interested and I think it unlikely that anything will happen in the current environment," said one source.

The source said that because it had so many small shareholders, a takeover of First Active would not be successful unless it had the support of the bank's management.

Another source said Ulster Bank might want First Active's network to improve its "footprint" in the Republic, which might be weak in certain regions. However, he believed the bank's parent, Royal Bank of Scotland, might have reservations about backing such a move.

IL&P has been mooted as a possible purchaser of First Active, because of its record in the past for making acquisitions. The purchase of Irish Permanent by Irish Life in 1999 followed the end of the five-year ban on the takeover of Irish Permanent following its demutualisation.

More recently IL&P purchased TSB Bank.

However IL&P has been pouring cold water on the idea that it might buy First Active. Earlier this week Mr David Went, chief executive of IL&P, said it would not be the most natural purchaser of the bank.

Whether Bank of Scotland Ireland would want to buy First Active would depend on whether the bank wanted to step up its involvement in the mortgage sector.

One source said that if the Scottish bank did not seek to purchase First Active, it would indicate that the bank had no interest in going "full scale" into the Irish mortgage market.

There have been indications from the bank that it is not interested in acquiring First Active.

Similar considerations may apply to IIB Bank, which has built up an involvement in the mortgage sector by way of brokers. A move to a branch network would seem a logical move.

Another source said First Active's current share price was high. If a bidding war developed, First Active would be more attractive to a bank that could introduce "synergies" and cost reductions that would justify a high price, than it would be to a bank that was buying First Active to build on its branch network.

Most sources praised First Active's chief executive, Mr Cormac McCarthy, for how he has run the company and said there was most likely a niche in the Irish market for an independent player.

The fact that the bank has so many small shareholders would give some comfort to the bank's management in terms of a hostile approach.

Any such approach would have to involve a very high price to be successful, according to a source.

If no bidder or bidders emerge for First Active over the coming weeks or months, the bank's share price is likely to soften, several sources said.