The Minister for Finance plans to invest £40 million (€50 million) in State-owned ICC Bank to back up growth in its lending.

The increase in the authorised share capital is contained in the ICC Bank Bill published yesterday. ICC, temporarily withdrawn from sale by Mr McCreevy last year, needs the additional capital to increase lending to the small and medium-sized business sector.

After the collapse of its sale to Bank of Ireland, Mr McCreevy told ICC's board and management to prepare the bank for a change of ownership.

The Minister will bring forward a motion in the Dail to dispose of his majority shareholding to allow for the sale of the bank, which the bank is considering.

The possibility of seeking a strategic partner has not been ruled out.

ICC's managing director, Mr Michael Quinn, said the legislation would allow the bank to concentrate on the options. "The possibility of a trade sale or a strategic alliance are both still open," he said.

ICC's current limit on Exchequer investment is £40 million. Under the terms of the new legislation, this will be doubled to £80 million. Up to about £15 million of this is likely to be provided over the coming months.

ICC is allowed to lend about double the amount of authorised share capital. The injection of new funds would thus allow ICC to lend on £80 million. It is close to its existing limit at the moment. But it also has its own profits to contribute.

Since its withdrawal from sale ICC has continued to expand rapidly. Profits in the six months to the end of April were up 64 per cent. The interim profits of £18 million before tax will allow the bank to increase lending by an additional £15 to £20 million after tax and dividends.

Earlier this year the bank submitted a business plan to Mr McCreevy. Mr Quinn said the plan was growth-based and focused on developing its activities in the business lending and venture capital sectors.