Government may review banks' tech link-up

The Government has refused to comment on speculation that it wants to review a proposed information technology joint venture between the State's two largest banks rather than leaving this to the European Commission.

The Commission has been considering the competition consequences of the proposed joint venture between AIB and Bank of Ireland since mid-July and was due to give its opinion of the project at the start of this week.

This deadline has now been extended until August 28th, a delay that suggests domestic competition authorities have asked for the joint venture to be referred to them instead.

Under EU competition law, this can occur where a merger or joint venture will have implications within only one member-state.

In the case of the Republic, the relevant competition authority would be the Department of Enterprise, Trade and Employment. A spokeswoman for the Department declined to comment on the Commission's delay yesterday, saying that this would be "inappropriate at this stage". The Tánaiste, Ms Harney, is already on record as opposing any merger between the two large banks.

The Commission was also reluctant to specify why it had decided to hold off on its decision but a spokeswoman confirmed that there could be one of two reasons: either the Commission had requested further information from the parties involved or the Irish Government had asked that the deal be considered by them.

A spokeswoman for Bank of Ireland said she had no knowledge of the bank having been asked for additional information by the Commission.

The bank was "unaware" of why the decision had been deferred, the spokeswoman said.

An AIB spokeswoman said the bank was simply awaiting the outcome of the Commission's decision, adding that she was aware the Commission had invited the opinions of third parties on the proposed joint venture.

On July 23rd, the Commission invited interested third parties to submit observations on the proposed operation through its Official Journal. These observations were to have been received within 10 days.

The Irish Bank Officials' Association (IBOA) has meanwhile asked the two banks to clarify the situation of a number of consultants who were working on the joint venture but have recently been let go.

It has emerged that the two banks have terminated the contracts of about a dozen self-employed IT consultants who were working on the joint venture. The IBOA has said the terminations had raised "serious issues for the future of this project".

The IBOA has opposed the joint venture from the start, expressing concern that the initiative was the first step in a full-blown merger between the banks.

The union is particularly worried about the potential impact of the venture on staff.

The AIB spokeswoman said the contractors in question had been engaged on the basis of the Commission's decision coming this week.

Now that it had been extended, the project did not have such tight deadlines and fewer staff were needed, she said.

"It doesn't have, in itself, any implication for the future," the spokeswoman added.

The two banks have previously expressed a hope that the joint-venture company would be established towards the end of this year, estimating that it would employ 700 staff.