Senior executives of the Bank of Scotland Ireland (BoSI) management team, including chief executive Joe Higgins, are believed to be the frontrunners to land the contract to service the remainder of the bank's loan book when parent Lloyds Banking Group pulls the plug on the Irish operation at the end of the year.

However, several other parties have expressed an interest in snapping up the contract. Market sources said two private equity houses, believed to include bank-buyer JC Flowers, were interested in taking on the administrative wind-down of the €32bn portfolio. Lloyds is expected to make a decision on the awarding of the service agreement in the next two to three weeks.

The management group is understood to include six members of the local executive committee. Sources said the team had been in discussions with Lloyds about a deal, but nothing had been signed yet. It is understood the team wants to be paid on a fee basis to manage out the loan book once Lloyds withdraws from the market.

However it is believed the management team is not bringing any money to the table, which could see them pipped by serious private equity players. The bank has said about 800 jobs will transfer to the new administrative vehicle, with only 36 compulsory redundancies expected. However, one senior bank analyst at a Dublin securities firm estimated the operation would only need about 100 staff after a year.

The bank is understood to be working already to whittle down the loan portfolio. One source said Lloyds had sent former BoSI staff who now work as consultants to Ireland last week to offer debt easement packages to some of its larger clients.

The remaining rump of BoSI will be competing with Nama to find buyers for debt and assets in distressed situations, particularly in the hotels area. It is understood that due diligence costs of about €100m excluding Vat will have been incurred by Nama following the completion of the eligible acquisition process, probably early next year. This amount is recovered directly from the institutions as part of the loan valuation process.