Government defers TSB sale talks

THE Cabinet is unlikely to discuss the sale of the TSB Bank until after the summer Dail recess, according to Government sources.

It is understood the three Government parties are very close to agreement on the future of the TSB and the two State banks ACC and ICC but no firm proposal would be brought to Cabinet next week. This would be the last chance for the Cabinet to discuss the matter before September.

The team established by the Minister for Finance, Mr Quinn, to look into options for the State banks is understood to have reported back six weeks ago. The Minister has been unable to finalise his proposals because of the need to deal with the financial aspects of the new anti crime legislation currently being considered by the Oireachtas.

However, the programme managers representing the Ministers who make up the Cabinet subcommittee that is considering the issue are understood to have reached broad agreement.

As expected, the TSB would be sold separately and not merged with the ACC and ICC as originally mooted in the Programme for Government agreed by the three parties. The money raised through the sale will be used to re capitalise ICC and ACC.

Labour originally favoured the merging of the two State banks, but it is understood that the option proposed by Fine Gael of leaving them as separate entities to seek out international partners is in the compromise agreement.

Democratic Left had been keen to link the sale with greater liberalisation of the banking market and an improvement in the facilities available to the low paid and unemployed. The long awaited Credit Union Bill, which would allow unions to offer a greater range of services, is expected to go through as part of any agreement.

In addition the role of An Post as a provider of banking type services to those on social welfare or receiving unemployment benefit would be examined by a commission. Access to the money transmission system controlled by the major banks would also be addressed by the commission.

Three financial institution, National Australia Bank, Ulster Bank and the Irish Nationwide Building Society have expressed interest in the TSB.

However, a new auction process is expected to be carried out and some new bidder may enter the frame, including the Irish Permanent.

National Australia Bank and Ulster Bank made offers of around £120 million two years ago. At the time, TSB trustees, whose agreement is needed for any sale, indicated a preference for National Australia Bank, which planned to merge the TSB with its National Irish Bank operation.