One of Leicester's best-known buildings has been taken over by a bank after the multi-million pound scheme to turn it into offices and shops hit financial trouble.

St George's Central, in St George's Way – widely known as the Blue Tower – has been repossessed by the Anglo Irish Bank because of difficulties finding tenants.

Regeneration bosses said they had no plans to forcibly buy the £33m scheme, which is three-quarters empty, as part of the redevelopment area.

It comes after the man appointed by the bank to run the property says he was confident of filling the development.

The former British Telecom and Royal Mail office complex has been owned by Magnet Property Investments, of London, for the past decade.

Kevin Mersh, a director at NB Real Estate in London, has been appointed by Anglo Irish – Magnet's biggest creditor – to find tenants for the site.

He said the property was in an attractive location, but it was "not without its challenges". He said he would look at ways of wooing potential occupiers.

"We will give incentives to attract tenants," said Mr Mersh. "We would offer rent-free periods."

The site has planning consent for 140,000 sq ft of offices over four storeys and 58,000 sq ft of shops and leisure outlets on the ground floor.

It includes a 135-room Premier Inn hotel in the bottom half of the tower and 24 occupied flats at the top of the base unit. The site has consent for another 51 flats at the top of the tower.

Mr Mersh did not rule out re-painting the 269ft blue tower, a colour choice which has prompted criticism. He said he had also taken charge of 11 other Magnet Property Investments sites on behalf of the Anglo Irish Bank. He said Magnet had not gone into administration.

Amir Zarbafi, who has fronted the St George's development for the past seven years, said he was no longer connected with the building after Magnet ended a consultancy contract with his company, Standford Properties

"I was never a shareholder or a director of Magnet," he said. "Standford Properties were contracted to fight the compulsory purchase order."

Magnet also caused controversy, in 2005, when it erected a giant sign at the side of the building criticising the people in charge of the city's regeneration plans.

David Hughes, chief executive of Prospect Leicestershire, the agency charged with redeveloping the city, said it had no plans to look at a compulsory purchase order.

He said he was keen to incorporate the building into the multi-million pound office quarter planned for the area around the railway station.

Anglo Irish Bank declined to comment. No-one from Magnet Property Investments could be reached for comment.