The Ulster is the second largest bank in Northern Ireland and the third largest in the Republic of Ireland.

Analysts have speculated that it might be worth up to £2.5bn.

The sale has been widely predicted as part of NatWest's defence against the £22bn Bank of Scotland offer.

NatWest says it is cutting jobs and selling "non-core assets in an effort to "reduce costs and improve profitability".

Martin Wilson: Floatation is number one option

As a result the Ulster Bank is to be either floated on the stock market or sold to a competitor.

Chief Executive of Ulster Bank Martin Wilson said floatation was the "number one option".

But he said: "In tandem with that there is the option being pursued of talking specifically in a formal way to people that might be interested in acquiring Ulster Bank."

Mr Wilson said the bank had a strong future no matter who the owners were and customers and its 2500 Northern Ireland staff had nothing to worry about.

Analysts speculating that the bank would be sold have suggested that Bank of Ireland, Irish Life and Permanent and a Belgian company have all shown an interest.