At the end of the biggest week in Irish banking since the government was forced to guarantee deposits and debts 18 months ago, Bank of Ireland chief executive Richie Boucher looks as if he will emerge as the head of the only institution not owned by the state.

As AIB scrambles to sell the family silver in a bid to limit the state control (with analysts forecasting that, even after selling its operations in Britain, Poland and America, it will still be at least 60% government-owned), Bank of Ireland is moving ahead with plans to launch a rights issue, to buy back more of its outstanding debt and to take out the government's warrants over a 25% stake in the bank.

That, analysts say, should limit the state's shareholding in BoI to no more than 40%, and possibly as low as 23%. It currently owns 15.7% of the bank.

According to analysts, Bank of Ireland's road to an independent future was made clear when finance minister Brian Lenihan said he envisaged that no new taxpayers' money would be invested in the bank and that the government would be a minority investor, pointing out that Lenihan was unable to say the same about AIB.

"Bank of Ireland has been the big winner this week," said one senior analyst. "They said [loan] impairments are peaking, pre-provision operating profits aren't too bad. I could see an investment case in Bank of Ireland."

Bank of Ireland could raise as much as €1.6bn in a rights issue or a placing, generating much of the €2.7bn of capital the Financial Regulator demanded it raise by the end of the year. A so-called liability management exercise - essentially buying back some debt instruments at a discount – may net €400m. The rest will come from the government converting some of the €3.5bn it invested in preference shares last year into ordinary equity. The bank will buy out the warrants that came with the preference shares that would have allowed the government to buy 25% of the bank at a knockdown price.

Boucher says the government will make a tidy profit on the warrants as the share price is trading at a significant premium to the strike price of the warrants. While institutional investors have fled the bank's share register, Boucher believes Bank of Ireland has an appealing investment case that will attract the backing of existing and new shareholders willing to stump up the cash and, significantly, it won't need the government to underwrite any rights issue.

"We believe our loan losses have peaked. They will reduce by a progressive basis over the course of the next few years. We have strong market positions in Ireland and we have good businesses outside Ireland. We will have a more constrained balance sheet, primarily funded by customer deposits, and given the strategic position of our business, we believe they will generate good operating profits," Boucher said last week.

The bank has been helped in its case to raise the €2.7bn by having the "least worst" discount among the institutions selling loans to Nama, according to Boucher. The bank is selling €12.2bn of loans to the agency, down from its initial estimate of more than €16bn. Its initial tranche of loans (totalling €1.93bn) was sold at a discount of 35% compared to the 47% average across all the lenders. Boucher said the bank has carried out a detailed review of the rest of its loans and the discount applied on the remaining loans will be "similar to that pertaining to the first tranche".

He said plans to boost capital have been in place for months and the bank is waiting to pull the trigger as soon as the European Commission gives its restructuring plan the go-ahead. Boucher believes the commission won't force it to sell profitable businesses, such as its joint venture with the Post Office in Britain.

"It's not a proud boast to say you are the least worst. We believe we have a business with a lot of challenges, but we have been implementing a focussed set of plans to deal with those challenges.

"There is a strong business here. We don't have strategic challenges at Bank of Ireland. We don't have a broken business model. We had a balance sheet that was too leveraged so we have had to deal with the size of the balance sheet and the level of capitals we had," Boucher said.