Hypo Real Estate Holding, the German lender bailed out during the financial crisis, drew more than 10 indicative bids for its Dublin-based Depfa Bank unit, according to two people familiar with the matter.
One person, who asked not to be identified, told news agency Bloomberg that bidders, mainly private equity firms, will be asked to pitch second-round offers next month.
Lone Star Funds, Apollo Global Management, TPG Capital and Bain Capital had expressed an interested in the business, media reports have said.
Hypo Real Estate, based in Munich, received European Union approval in 2011 for a bailout as Germany injected €10 billion of capital to save it from collapse after Depfa could not raise financing following the bankruptcy of Lehman Brothers Holdings in 2008.
Hypo Real Estate bought the public sector lender the previous year.
A spokesman for Hypo Real Estate in Munich said the company is evaluating the indicative offers.
Meanwhile, rating agency Fitch has said that the bank's plan to sell Depfa is likely to take time to achieve and is unlikely to spur further M&A in the German banking sector.
The tough regulatory approval process and weak growth prospects are likely to keep M&A activity low, the agency added.