Plans to float Newbank, the new banking force to be created from a merger of the ACCBank and the TSB, have run into serious difficulties. Staff at ACC have refused to co-operate in any way with the merger programme.

The first part of the programme to be affected is the data and computer processing systems. ACC staff have "blacked" this work since last Monday. Attempts to hold talks to resolve the differences were made on Thursday and yesterday, but proved unsuccessful. A volatile industrial relations situation has now developed at ACC.

Initially, relations between ACC trade union activists and the chief executive of the TSB, Mr Harry Lorton, who is handling the organisational aspects of the merger, were so good that full-time union officials were excluded from the talks. Now that this good relationship has broken down, there are no clear procedures for making progress on the dispute.

While Mr Lorton was overseeing the merger programme, the chief executive of ACC, Mr John McCloskey, has been planning the public flotation of Newbank. Unless the impasse between the ACC union activists and Mr Lorton is resolved fairly quickly, that flotation could be delayed. Trade union activists have accused Mr Lorton of failing to honour commitments to consult them on the staffing implications of extending the TSB's Unisys/Unibank system to the ACC. If it becomes the common system for Newbank, ACC staff fear it could lead to widespread redundancies of existing head office staff. There are also concerns that plans to rationalise the branch structures of the ACC and TSB in Newbank will be largely at the expense of ACC staff.

Both sides appear to see the issue of the Unisys/Unibank system as a trial of strength. Earlier this week, ACC union activists held a meeting they claim was attended by about 150 members. They have urged staff not to attend planning meetings proposed by management.

It is less than a month since the Minister for Finance, Mr McCreevy, gave the go-ahead for the merger.