Financial borrowing limits for the State-owned ICC Bank have been raised from £2.3 billion to £3.5 billion.

Under legislation amended after Bank of Ireland withdrew from purchasing ICC Bank, the Minister of State for Enterprise, Mr Noel Treacy, told the House it was the Government's intention "to ensure the bank remains adequately capitalised while it is under State ownership".

The Minister for Finance, Mr McCreevy, came under sharp attack by the opposition parties for his handling of the sale. Neither Mr McCreevy nor his Minister of State, Mr Martin Cullen, was in the House and Mr Treacy dealt with the debate.

Fine Gael's finance spokesman, Mr Michael Noonan, said this was a "bad day's work". "When an institution goes up for sale and it is not sold, that inflicts damage on the value of the institution." Labour's finance spokesman, Mr Derek McDowell, said the Government "must decide with in a short time when it intends to dispose of the bank or if it intends to retain it within the State sector. We now have the worst of all worlds. The bank is effectively in limbo. It does not know what it is meant to do. It does not know whether it will be sold within a few years or not at all. That position must be clarified soon."

Mr Tom Enright (FG, Laois/Offaly) said he had always been a supporter of ICC Bank which he felt did a very important job. He believed the bank should not now be offered for sale for at least five years. "To do otherwise would be high risk. Capital must be invested in the bank to allow it to go forward from here."

Mr Treacy told deputies the share option provisions would now be discussed and the Bill would allow for an increase in the bank's borrowing position.

Outlining the history of the proposed sale of the bank, Mr Treacy said the Government decided in July 1998 to "dispose of the State's interest in ICC Bank plc as there is no longer any significant strategic or policy justification for continuing direct State involvement in the banking sector".

Initially 10 banks expressed an interest but only three firm indications were received by the August 1998 deadline. National Australia Bank and Irish Intercontinental both withdrew and a single final bid was received from the Bank of Ireland. "Its bid was substantially less than the top range of the earlier indicative bids," he said.

After consultations with the bank's board, the Minister for Finance then issued a press release confirming Bank of Ireland as the preferred bidder.

Mr Treacy said a final offer would not be made until the Bank of Ireland had completed the final due diligence process. Mr McCreevy "informed Bank of Ireland at that stage that he was not happy with the price it put on the table and that he wanted this increased".

The Bank of Ireland told the Minister on Monday it no longer wished to proceed with the acquisition, Mr Treacy said.

Mr Noonan said that during the second stage of the Bill which was originally prepared to facilitate the sale of ICC, he warned the Minister that "it was a risky strategy to proceed when there was only one willing purchaser". By doing so the Minister was leaving himself open to the decision of one financial institution as to whether the ICC bank would be purchased.

Praising the bank, Mr Noonan said it had done much for small businesses since it was founded in the 1930s and it was important to continue supporting it.

Mr McDowell said Mr Cullen had effectively told the House the deal was "done and dusted", when in fact "something went seriously wrong in the last few days of last week". The House was entitled to know what went wrong since the Minister's failure to carry through on his policy had inflicted serious damage on ICC bank.

Section three of the Bill, which was now being deleted, "effectively gave unfettered power to the Minister to sell the ICC to whomever he wanted for whatever price he wanted in whatever circumstances he wanted. There is a lesson in this for the future. These deals are not done and dusted until such time as the money is handed over and the contract is signed."

A number of sections relating to the sale of the bank were deleted, as was the Schedule to the Bill which stated that once the bank was sold it would be treated similarly in law to other private banks.