National Australia Bank is expecting to have received bids for its two Irish banks from Halifax Bank of Scotland, Lloyds TSB and Rabobank by close of business today.

NAB and its advisers, Lazard, will assess the bids for National Irish Bank and Northern Bank over the coming days. The bank's chief executive, Mr John Stewart, is expected to announce that it has entered exclusive negotiations with a preferred bidder next week. None of the three financial institutions would comment on their interest in acquiring these financial institutions when contacted by The Irish Times yesterday.

The two banks have been valued at more than €1.2 billion but much will depend on the level of interest. HBOS and Rabobank already have a presence in the Republic. HBOS owns Bank of Scotland Ireland while the Dutch bank, Rabobank, owns ACC Bank and also has an operation at Dublin's International Financial Services Centre.

Lloyds TSB has previously been mentioned as a likely buyer of the Republic's two biggest banks, AIB and Bank of Ireland. It did have a presence in Northern Ireland where it operated the TSB franchise which it subsequently sold to AIB.

This would be the bank's first expression of interest in entering the Republic. Some sources have pointed to potential difficulties it may face in relation to using the Lloyds TSB brand in the Irish market given that Irish Life & Permanent's bank, Permanent TSB, already incorporates part of that brand.

A legal battle to resolve the issue could not be ruled out.

HBOS has been viewed as the most likely of the bidders to succeed in buying the two banks, which would allow it to achieve its stated ambition to build a retail banking presence in Ireland.

It is expected to drop the NIB brand and offer its retail banking products under the Bank of Scotland name in the Republic but would retain the Northern Bank brand in Northern Ireland.

NIB and Northern Bank are both run from Belfast and their information technology systems and much of their business is co-ordinated from there. HBOS already has a substantial call centre and software development centre in Northern Ireland, which could ease the integration of NAB's banks.

Rabobank purchased the former State-owned bank, ACC Bank, in 2002 and has held discussions about merging with the mutually-owned EBS building society, which would give it a substantial presence in the Republic.

Mr Stewart is expected to make a statement on the future of NIB and Northern Bank on November 10th when he will announce the group's results. Last week the bank appointed Ms Lynne Peacock to head its European operations which include the two Irish banks. She is expected to oversee their sale.

NAB is likely to use the funds raised through the sale to invest in its two UK banks, the Clydesdale and the Yorkshire.