The very purpose of subband codec is the attainment of data rate compression through the use of quantizer and optimum bit allocation for each decimated signal. Yet the question of floating-point quantization effects in subband codec has received scant attention. There has been no direct focus on the analysis of quantization errors, nor on design with quantization errors embedded explicitly in the criterion. This paper provides a rigorous theory for the modelling, analysis and optimum design of the general M-band subband codec in the presence of the floating-point quantization noise. The floating-point quantizers are embedded into the codec structure by its equivalent multiplicative noise model. We then decompose the analysis and synthesis subband filter banks of the codec into the polyphase form and construct an equivalent time-invariant structure to compute exact expression for the mean square quantization error in the reconstructed an equivalent time-invariant structure to compute exact expression for the mean square quantization error in the reconstructed output. The optimum design criteria of the subband codec is given to the design of the analysis/synthesis filter bank and the floating-point quantizer to minimize the output mean square error. Specific optimum design examples are developed with two types of filter of filter banks-orthonormal and biorthogonal filter bank, along with their perpormance analysis.