IRISH Life & Permanent and a consortium led by Cardinal Asset Management are to be unveiled as the final bidders for EBS on Monday.
The Irish Independent has learned that the National Treasury Management Agency (NTMA) has recommended that the two groups go through to the next round of bidding.
The recommendation was submitted to the Department of Finance yesterday but has yet to be signed off on by Finance Minister Brian Lenihan.
Mr Lenihan is expected to give the short-list the nod on Monday, with a formal announcement to be made later that day.
The news will come as a disappointment to US private equity outfit JC Flowers and UK group Doughty Hanson, who will both fall out of the bidding war.
Irish Life & Permanent (IL&P) and the Cardinal consortium had been seen as forerunners for most of the process, but recent speculation had suggest JC Flowers was gaining on the group.
A spokesman for Cardinal last night said he had received "no information" on the outcome of the short-list process.
A spokesman for IL&P could not be reached for comment. The Department of Finance declined to comment, while a NTMA spokesperson could also not be reached for comment.
IL&P is already lining up banks to under-write a rights issue as part of the bancassurer's plan to buy EBS and merge it with IL&P's Permanent TSB bank.
At its recent results presentation, IL&P also detailed several other acquisition targets, including Irish Nationwide, ICS, New Ireland, Bank of Ireland Asset Management and AIB Investment Managers.
The Cardinal consortium, which includes US investor Wilbur Ross and Washington leveraged buyout firm the Carlyle Group, is believed to have €3bn lined up for other Irish acquisitions to compliment the EBS deal.
The emergence of a shortlist will come as a relief to bidders since several sources have expressed frustration at the slow pace of the sale process.
At one point, a preferred bidder looked set to be announced in September, with IL&P chief executive Kevin Murphy publicly saying he expected "clarity" on the bid by the end of September.
EBS boss Fergus Murphy dashed those hopes on September 21, when he said that the sale process could take several months to resolve.
Efforts to sell EBS come against the backdrop of a European Commission probe into the €875m in state support earmarked for EBS.
The probe was announced last week, after Brussels said it had "concerns" over "whether the distortions of competition caused by the aid to EBS are sufficiently addressed".
The investigation is expected to last six weeks but the Department of Finance has stressed that the EBS sales process will continue unhindered.
EBS made a post-tax loss of €218.5m in the first half of the year after booking more than €275m of loan impairments.