Banks submit merger proposal to Minister

ACCBank and TSB Bank have submitted a proposal to the Minister for Finance that the two banks be merged and floated on the Stock Exchange in 2000. A new holding company is now expected to be established, with ACCBank chief executive Mr John McCloskey and TSB Bank chief executive Mr Harry Lorton becoming joint managing directors.

Mr McCloskey will have responsibility for the development and implementation of the flotation, while Mr Lorton will eventually become chief executive of the publicly quoted company. The full board of directors of the merged entity will be announced shortly.

The banks are also proposing that the new entity be afforded legislative protection similar to that enjoyed by newly floated building societies to block any immediate take-over bid.

Such legislation would prohibit any shareholder from building a stake of more than 15 per cent in the group when it begins trading on the stock market.

The banks said the statutory prohibition would give the new bank an opportunity to establish itself and to lay the groundwork for the future. The move had been expected, as similar protection was granted to Irish Life when it became a publicly quoted company in 1991.

A structure is to be established to facilitate the merger and flotation process, comprising an equal number of non-executives from each of the banks, which will develop the business plan and prepare the organisations for the merger and flotation.

In a statement yesterday the two boards said they are satisfied that a compelling business case exists for the creation of this new entity, which would be a financially strong, competitive, Statewide bank.

"Its aim would be to continue to develop and maintain long-term, profitable customer relationships by providing a wide range of competitive products and services through a variety of appropriate delivery channels," it stated.

"The boards of both banks are committed to a partnership approach with the staff and unions. The form and scope of this have yet to be decided, but it is a fundamental principle that there would be no compulsory redundancies arising from the proposed merger," it stated.

This will include the development of an Employee Share Ownership Plan which will be put in place in return for productivity and flexibility from the staff.

TSB Bank is the larger of the two banks, with 80 branches and 1,100 employees, while ACCBank has 50 branches and 550 employees.