ICC Bank is now worth at least £100 million, according to bank chairman Mr Phil Flynn. The bank would like to form a strategic partnership to support future growth and Mr Flynn would favour a partnership with a foreign based bank, he said.

ICC, which is paying the Government a dividend of £2.5 million, is seeking more capital this year from its State shareholder to fund growth in lending, venture capital investments and the development of other business areas.

While Mr Flynn sees a role for the State in banking, he said the ideal solution to ICC's capital shortfall would be to allow the bank to take a strategic partner. ICC will have "significant" capital needs over the next few years, he said.

There are many avenues from which capital could come other than from the Government, Mr Flynn suggested. But he accepted that any decision of its shareholding structure would be taken by the Government.

"There is plenty of interest out there and it extends beyond our boundaries," he said. He declined to comment on whether he would like to see a majority or minority partner. State owned banks face problems or constraints not faced by other banks, he said, but ICC continues to discuss strategic partnership options with European banks.

In the meantime, ICC has not been sitting back waiting for the Government to make a decision on its future ownership, he said.

"We have decided, regardless of the direction of future ownership, to equip ourselves for the marketplace to get out there and do the business," he said. Developing and building the bank within its niche markets has increased its value from the £30 million to £40 million suggested when the bank was first put on the market in 1990.

ICC's niche market is servicing the needs of small and medium sized businesses. It is a growing market - a strong level of confident SME's helped ICC to generate growth in underlying profits of 8.4 per cent for the year to end October 1996.

"We have a niche market which is well served. Our customer relationships are second to none and we only lose customers when they default or grow too big for us," Mr Flynn said.

The bank is now in the process of a full strategic review of operations with consultants Coopers and Lybrand. There will be voluntary redundancies and early retirements but the review is aimed at finding new sources of income and ways to improve performance. Cost savings of £2 million per annum are anticipated which will bring the cost income ratio "a couple of points" below the current 50 per cent level.

"We are examining all the strategic opportunities to expand our business base and to position the bank for the future," Mr Flynn said.