ICC board to advocate £220m bid


Four senior executives of the Irish arm of Bank of Scotland will have shares in the merged Bank of Scotland/ICC worth about £20 million (€25.4 million) if the Government accepts the £220 million bid for ICC.

The ICC board is expected to recommend the Bank of Scotland offer to the Minister for Finance this week and possibly as early as today.

The executives are Bank of Scotland (Ireland) chief executive Mr Mark Duffy, Mr Richard McDonnell, Mr Harry Slowey and Mr Michael Hickey, who own a combined 5 per cent of the Irish subsidiary since Bank of Scotland took over Equity Bank. They will have the same stake in the enlarged bank which will be valued at about £400 million. It is not known if Bank of Scotland has an option to buy out this stake.

While the board is expected to recommend the Bank of Scotland to Mr McCreevy, that does not rule out the possibility of a third party emerging. But banking sources believe a rival bid is unlikely and that Bank of Scotland's success is virtually assured.

If the takeover proceeds, it is understood the combined entity will trade as Bank of Scotland (Ireland) and that Mr Duffy will be chief executive with ICC chairman Mr Phil Flynn as chairman of the enlarged group.

The expected sale of ICC comes almost a year after a takeover bid from Bank of Ireland collapsed after the bank refused to offer more than £200 million.

Bank of Scotland is determined to get a significant stake in the lending market for Irish small and medium-sized businesses.

It is understood Bank of Scotland will keep its Irish mortgage lending business separate from the merged bank. But it is not clear what Bank of Scotland's plans are for ICC Venture Capital. Market sources suggest ICC Venture Capital, one of the State's top three such firms, could be merged with Bank of Scotland's own venture capital operation.

A sale of ICC to Bank of Scotland would also pave the way for a shares windfall for ICC's 320 full-time staff. Under the terms of an employee share option scheme which has been approved by the Department of Finance and is awaiting Revenue Commissioners approval, the 320 staff will receive a 14.9 per cent stake in ICC.

On the basis of a £220 million offer from Bank of Scotland, this 14.9 per cent stake would be worth £32.8 million or an average of £100,000 for every member of the 320-strong staff.

Meanwhile, there is growing speculation that Bank of Scotland itself is set to be part of a £25 billion sterling merger with Abbey National and that a deal may be announced later this week.