Mr Schaeuble will be joined by the head of the European Investment Bank (EIB) Werner Hoyer, as well as Finance Minister Michael Noonan and Public Expenditure and Reform Minister Brendan Howlin for a joint signing ceremony officially launching the Strategic Banking Corporation of Ireland (SBCI).

The state-backed SBCI, which was announced last May, will make up to €800m available for small and medium businesses under favourable terms.

Under the scheme, existing main street banks will borrow from the SBCI and lend to SMEs. The banks will assess the risk of lending and will continue to hold that risk. But the lenders must demonstrate that the lower cost of sourcing the funds is passed on to SMEs.

This is needed in order to avoid a breach of European state-aid rules. SBCI will have a lower cost of funding, providing a potentially cheaper option for businesses to access financing.

Money will initially come from German development bank KfW, the Ireland Strategic Investment Fund (ISIF) and the European Investment Bank (EIB).

A spokesman for Mr Noonan said Friday’s signing will allow for the money to be released.

Lending is likely to begin before the end of the year, with a memorandum of understanding close to being signed with the two main banks.

The bank was incorporated as a company on September 12 and the interim board held its first meeting shortly after.

Last month it emerged that the chief executive of the SBCI will be the first head of a state-owned bank since the crash to be hired without being subject to a formal €500,000 pay cap.

The head of the bank will be hired under the umbrella of the National Treasury Management Agency (NTMA), where chief executive John Corrigan’s €416,500 salary is the highest currently paid to any member of staff.

Salaries at the NTMA are not subject to a formal upper limit However, it is thought unlikely that any member of staff, including the head of the new bank, will earn more than Mr Corrigan, who is due to retire.

When the SBCI was announced in May, it was expected that about half a billion euro would be made avaialable in funding, with EIB usually funding between 30pc and 50pc of a project.

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