The European Commission has begun a preliminary investigation into the proposed merger of Bank of Ireland and AIB's technology services divisions, the competition directorate confirmed yesterday.
The Commission has requested documentation from the two parties involved in the merger and is due to decide by August 19th whether to clear the deal or pursue a further four-month inquiry.
A decision to pursue a more in-depth four-month investigation into the proposed merger would involve evaluating its impact on competition in the banking sector.
A Commission spokeswoman said the competition directorate had been officially notified of the deal by the parties on July 15th.
One month after this date, a notification would be issued, the spokeswoman added.
The two banks plan to set up a joint-venture company that will manage their technology systems, as well as market its services to other potential customers, such as utility companies in Britain.
The joint venture will be established on a 50/50 basis and is expected to employ 700 staff, who will transfer from the information technology departments at Bank of Ireland and AIB.
An independent management team will be recruited to run the company and the banks insist neither AIB nor Bank of Ireland will have access to information concerning each other's customers.
The Irish Bank Officials Association, which has already expressed reservations about the proposed merger, said yesterday it would be making representations to the Commission next week.
Its general secretary, Mr Larry Broderick, said he would raise concerns with the Commission regarding staffing issues and the broader question of whether it was the first step towards a merger between the two largest Irish banks.
About 300 staff are employed at AIB's information technology unit, which is divided between its Dublin headquarters at Ballsbridge, and Donnybrook.
Bank of Ireland's information technology division is based in the Dublin suburb of Cabinteely, where it employs about 200 people.
A further 200 to 250 Bank of Ireland employees from this unit have transferred to a joint venture with Perot Systems since 1998.
Bank of Ireland will now exit that arrangement and those staff are expected to move to the new company.
Up to 80 jobs could be lost at the banks as a result of this merger.
Mr Broderick said the association was concerned that there should be no compulsory redundancies at the banks and that staff who were transferred to the new joint venture would have the same terms of employment.
An AIB spokesman confirmed the company had received notification from the Commission of its preliminary inquiry.
