The proposed merger of ACC and TSB banks has run into difficulties with indications that the deal is teetering close to collapse.
The board of Newbank - the structure established by the Minister for Finance to implement the merger - will meet on Tuesday amid growing uncertainty as to how very serious problems which are undermining the proposed merger can be resolved. Some sources suggest TSB may decide shortly to walk away from the process.
A major sticking point is the uncertainty as to when the merged bank would be floated on the stock exchange. The Minister for Finance Mr McCreevy announced before Christmas that the merger and flotation would not take place at the same time as had been planned originally, creating huge uncertainty for both banks.
The new bank was initially scheduled to merge and float on the Dublin market in May. Sources close to the negotiations admit that the merger process is now running far behind the envisaged timetable, which anticipated that agreement between the trade unions and the new bank would have been in place by now.
A TSB spokesman acknowledged there were a number of very serious issues which remained to be resolved before any further progress could be made on merging the two banks.
"There are some significant problems which all parties are trying to resolve at the moment," he said. One major obstacle in terms of the negotiations with unions representing the bank's employees is the proposed Employee Share Options Plan (ESOP), which is being offered in return for an agreement on increased flexibility and enhanced productivity.
As there is no certainty as to when the new bank will seek a stock market listing, the trade unions insist it is impossible to negotiate a realistic ESOP for employees. Another problem is TSB's reluctance to become part of the State sector for any length of time, a scenario which would occur if it merged with ACC but did not float. Under the terms of the proposal, TSB reserves the right to withdraw from the process up until the day the bank is merged and floated. Mr McCreevy has appointed ICC Bank chairman Mr Phil Flynn to identify the issues blocking the merger and to facilitate the design of a suitable partnership structure for the banks.
These negotiations have run for some time now but are understood still to be a long way from achieving a consensus.
ACC has 600 employees and TSB has 1,100. The merger is likely to lead to some voluntary redundancies and the closure of some branches.
The board of the proposed new bank will hope to nudge the negotiations along when it meets next week. The boards of ACC and TSB banks will meet later next week.
