Bank of Ireland will unveil plans early next week for its junior bondholders to exchange 2.8 billion euros ($4 billion) in debt for shares in the bank, a source familiar with the process said on Friday.

Ireland's largest bank is scrambling to avoid majority state control as it seeks to raise some 5.2 billion euros in capital by the end of July to bulletproof it from further potential loan losses following a devastating property crash.

Analysts doubt that the bank, in which the state already holds a 36 percent stake, can avoid raising the funds without taxpayer aid. meaning that the entire Irish banking sector will be under state control.

The Irish government has controversially offered junior bondholders in Allied Irish Banks just 10-25 percent of the value of their investment as part of efforts to make investors share the burden of bailing it out. But dealers said Bank of Ireland was not expected to demand such a large discount.

Bank of Ireland paper is trading at around 55 cents in the euro so that appears to be the price the market is eyeing. The view seems to be that they won't be treated as aggressively as AIB.

AIB's action against its junior bondholders is being challenged by investors in the state-owned bank. A court hearing is scheduled to take place on June 2.

In addition to the debt for equity swap there has been speculation that Bank of Ireland is also planning a rights issue and a private placement.

UBS, Deutsche Bank and Credit Suisse are advising Bank of Ireland on its capital-raising plans. ($1=.7023 euros) (Reporting by Carmel Crimmins; Editing by Greg Mahlich)