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The Irish government plans to introduce legislation Wednesday to liquidate the Anglo Irish Bank as the eurozone nation attempts to secure a deal on its banking debt, a source said.
The plans are expected to be brought before a late sitting of the Irish parliament on Wednesday night.
The assets of the bank, now known as the Irish Bank Resolution Corporation, will be transferred to the National Asset Management Agency (NAMA), Ireland's state-run 'bad bank', which buys risky mortgages from debt-plagued lenders.
However, the changes also hinge on the support of the European Central Bank (ECB).
The governor of the Irish Central Bank, Patrick Honohan, was attending a meeting of the ECB in Frankfurt on Wednesday, ahead of a formal meeting on Thursday.
Ireland was forced to accept an 85 billion euro ($115 billion) EU-IMF bailout in late 2010 when it had bailed out its banks after a domestic property bubble burst.
Dublin has long sought an improvement on the terms of its bank bailout, particularly on the 31 billion euros of promissory notes -- effectively IOUs -- pumped into the failed Anglo Irish Bank.
It is expected that the promissory notes will be replaced by a bond, of up to 40 years in length, reducing the immediate repayment burden on the Irish state, the source said.
Dublin already issued a long-term bond last year to ease the immediate financial pressure.
The Irish parliament is scheduled to sit late Wednesday, with finance minister Michael Noonan to deliver a speech to lawmakers. Members of the country's upper house, the Seanad, have also been placed on standby.
In 2010, Anglo Irish posted a 17.65 billion euro loss, the largest corporate loss in Irish history.