Germany's largest public sector finance bank, DePfa, is moving its headquarters to Dublin and will be the third-biggest bank in the Republic after AIB and Bank of Ireland.

DePfa Bank will operate as a wholesale bank from Dublin's International Financial Services Centre where it currently employs 100 staff at a subsidiary operation established in 1994. It does not operate as a retail bank.

By June or July, the Irish subsidiary will assume the position of head office for that part of the bank's operations with Mr Gerhard Bruckermann moving to Ireland as its chairman. Mr Dermot Cahillane will remain as managing director of Depfa in Ireland.

DePfa Bank is being split into two companies, the public finance bank and a property bank. The property bank's headquarters will be in Wiesbaden, Germany. DePfa Bank shares will continue to be listed in Frankfurt.

The Irish bank has assets worth €45 billion (£35.4 billion). It reported profits of over €50 million in 2001, down from €63 million in 2000. Mr Cahillane said weaker profits last year were largely due to the sharp fall in interest rates as well as additional costs incurred as a result of the establishment of a head office in Ireland.

Mr Bruckermann said the bank aimed to increase profits by around 20 per cent per annum and was confident it would achieve this target in 2002. DePfa Bank provides financial services for public authorities in more than 30 countries. These services include financing infrastructural projects, credit analysis and placing public debt in the capital markets. Recent projects include a $55 million (€62 million) credit facility for the city of Marseilles and a £300 million sterling (€485 million) 25-year loan to refurbish Glasgow secondary schools as part of an arrangement between the city council and private construction companies.

"The size of the public finance market means that DePfa Bank has significant growth potential. We will be targeting western, central and eastern Europe as well as Japan," according to Mr Bruckermann.