The Minister for Finance Mr McCreevy is expected, within days, to receive reports from the ICC and ACC banks on their preferred options for their future ownership and development. The Minister sought the reports from the banks to help him reach a decision on the development of the State-owned banks and TSB. A Department spokesman said yesterday that the Minister is expecting the reports by Monday. The issues will be decided "over the coming months", he said. No more definitive time-scale for a decision has been revealed.
ICC is expected to plump for continuing to operate as a bank for small and medium sized customers and a venture capital provider with either a domestic or foreign partner.
While the bank's strategy will depend on the potential partners that emerge and their proposals, there are a number of key considerations for ICC. The attractiveness of a domestic partner will depend on the extent to which that partner is already involved in business banking. A bank already heavily involved in the sector would be unattractive to ICC because of the overlap involved and the danger of redundancies. A strong bank not already involved in business banking would be seen by ICC as a good partner . Irish Permanent, which has indicated some interest in developing a business banking arm, is likely to be seen as an attractive partner as would a foreign bank with little or no presence in the Irish market, or in the business banking end of the market.
ACC's preferred strategy remains a takeover by or a strategic partnership with a strong foreign bank. ACC is open to a full sale or a partial sale of the bank to a well-capitalised foreign bank. This would bring a new competitor into the Irish banking market and ensure that ACC had access to the capital required for expansion. Without access to adequate capital, ACC feels it will not be able to provide the services customers want and it will be squeezed out of the market.
TSB was not been asked to put forward options. A spokesman said yesterday that the bank is awaiting the Minister's views. When these are made known the board will consider them, he said. The Government is unlikely to block the sale of TSB, or of stakes in the two state owned banks. In 1992, when the same combination of political parties were in Government, bids were sought for ACC and ICC.
