Whether NCB will voluntarily apply to be nationalised is still unclear, but the sources said government officials had summoned NCB president Shigeoki Togo earlier on Saturday and urged him to make the application.

Togo refused any comment as he left the Office for Financial Revitalisation, but government sources said that the bank is expected to announce its decision within 24 hours of the meeting.

The decision will be tough for the once-prestigious bank, and sources in the bank indicated it had not yet bit the bullet."We are really upset that the government is jumping to such conclusions...We have not given up our efforts to restructure on our own," an NCB executive -- who declined to be named -- said.

But even if NCB refuses to volunteer itself, Tokyo has alreadyresolved to declare the bank insolvent on Sunday and clear the way for its nationalisation, government sources said.

They said that inspections of NCB made by the Financial Supervisory Agency (FSA) earlier this year showed irreparable deterioration in the bank's balance sheets, which have been saddled with hefty problem loans.

The fate of NCB is being closely watched as Japan continues its efforts to reform its banking sector and a fragile financial system burdened with problem loans -- a legacy of the nation's economic bubble of inflated asset prices in the 1980s.

Two months ago, the government earmarked 18 trillion yen ($153 billion) to temporarily nationalise failed or failing banks. The money can also be used to cover loan losses if a bank is taken over as a public "bridge bank".

Another 17 trillion yen has been set aside for protecting depositors if their banks fails.Analysts have doubted NCB's ability to clean up its bad loan mess and it had long topped the list of potential candidates to followin the footsteps of Long-Term Credit Bank of Japan (LTCB), which in October became the first nationalised bank.

LTCB had at first hoped to persuade Sumitomo Trust & Banking Co to rescue it through a merger, but was ultimately rejected. Like LTCB, NCB is a specialised long-term loan provider to corporate customers which once helped a struggling nation emerge from the ashes of war. But it lost its competitive edge due to deregulation measures which allowed other financial firms to extend long-term loans.

NCB said last month it expects to have 3.22 trillion yen worth of problem loans at the end of next March, accounting for about 38 per cent of its loans outstanding.

The FSA and the government had earlier urged NCB to take measures to boost its capital -- such as a merger -- but it too failed to find a suitor.

Earlier this week, NCB and Chuo Trust & Banking Co announced they had agreed to seek a partial alliance, but Chuo Trust flatly ruled out a rescue merger with NCB.

Financial sources said that ChuoTrust was concerned about a lack of transparency in NCB's asset portfolio and the large latent losses in its securities holdings. Chuo is still seen likely to be the one to eventually take over NCB's operations if it can clean up its balance sheets after being nationalised.

Separately, the Nihon Keizai Shimbun said in its Saturday evening edition that Britain's Gartmore Investment Management Plc, a partner with NCB in a joint investment trust venture in Japan, will take over the troubled bank's stake and effectively take over control of the venture.