Unions representing staff at ICC Bank are seeking urgent clarification from the Minister for Finance, Mr McCreevy of his plans for the share option scheme, which will be set up for employees as part of the sale of the bank.
The unions are understood to be concerned about suggestions in a weekend report that ICC employees may not get a similar 14.9 per cent stake in the bank as that agreed for employees in Telecom Eireann. With their advisers, KPMG Corporate Finance, the unions are currently finalising their submissions to the Department on an employee share option plan (ESOP) for ICC.
Union sources said an article in the Sunday Business Post had shaken the confidence of their members in the trust they can have in the Department.
"We will be contacting the Department of Finance to make our views known but we are not interested in reacting to press reports," one source commented.
Union sources said that, as far as they are concerned, a Government decision had already been taken in principle agreeing to an ESOP giving the ICC employees up to 14.9 per cent of the bank.
In a statement issued in July 1998, the Department of Finance said: "The Government also accepted the principle of an ESOP and authorised the Minister, without prejudice, to enter into negotiations with staff on the terms conditions and structure of an ESOP, whereby employees of ICC Bank plc could obtain a 14.9 per cent shareholding in the bank. The terms and conditions of any proposed ESOP will be subject to Government approval and, in this regard, the Government noted the principles already established in relation to other State enterprises and, in particular, Telecom Eireann."
This position was later reaffirmed in letters from Mr McCreevy to the employee representatives. The Irish Times has established that the 14.9 per cent stake was never off the table but that the terms for that stake have to be negotiated. Talks have not yet started on the terms for an employee share option scheme and, in particular, what stake has to be paid for and how much is to be paid for it, and what stake will be given on a non-cash basis in return for concessions.
One source suggested that the unions expected to get a 5 per cent stake free for past job flexibility and to purchase an additional 9.9 per cent stake at a discount of 20 per cent. Union sources insisted that they were looking for an ESOP along the lines of the Telecom arrangements and stressed that employees at ICC had "made great sacrifices" to secure the bank's current level of profitability.
Telecom Eireann employees are to get 5 per cent of the company in return for radical changes in work practices and redundancies and are buying an additional 9.9 per cent.
Employees are expected to get shares in return for "transformation" or other concessions which would add to the value of the bank. One source suggested that the value of the bank to any potential buyer would be increased where the staff fully supported its transfer to the private sector and that this could be reflected in what staff get in the same way that productivity arrangements meant shares for Telecom staff.
ICC is to be sold through a public tender. The sale process will get underway when the Department appoints its advisers. A second tender process is now underway for the position following the withdrawal of the first tender winners - a consortium of ABN-Amro and Arthur Cox - when Arthur Cox found it had a conflict of interest.
Five parties or consortiums have tendered in the second process and a decision on corporate finance and legal advisers is expected in the near future.
