The trustees of TSB Bank and the Government have been unable to agree on how the bank should be sold and a decision on its disposal is now unlikely until next year. TSB Bank trustees are maintaining their opposition to the sale of the bank by open tender, which is the Department of Finance's favoured option. Official sources contend that the trustees have not put forward any other options.

A spokesman for the trustees confirmed the bank wanted to choose its own partner rather than be sold through a tender process, but added that "the matter is now under active review".

The spokesman rejected any suggestion that the trustees were holding up a decision on the sale of the bank, adding: "We have been frustrated for a long time on this." In 1993, the TSB sought government approval for the sale of the bank to National Australia Bank.

"Over the past number of years, the bank has had meetings with successive ministers for finance, including the current Minister, on a range of issues - among them proposals regarding the bank's future. The matter is now under active review by the trustees of the bank who are empowered under section 57 of the TSB Act 1989 to make proposals."

It is understood that TSB representatives met the Minister, Mr McCreevy, in recent weeks. While Mr McCreevy said in an interview with The Irish Times in July that he planned to make a decision on the TSB and the State-owned ICC and ACC banks before Christmas, a Department spokeswoman said yesterday that the issue was "not live at the moment".

With the position on the TSB apparently deadlocked for the moment, decisions on the future of ICC and ACC are more difficult. But the Minister for Finance could decide to go ahead and allow the two State-owned banks to seek strategic partners. ACC has set out its preferred options for future development in a document sent to the Department of Finance recently following a request from the Minister for proposals. ICC's response to Mr McCreevy is imminent.

Both State-owned banks are understood to be interested in being allowed to merge or form strategic partnerships with wellcapitalised, foreign-owned banks. These "partnerships" could include the full sale or the sale of a majority stake in the State-owned banks to the partner bank.

TSB was not asked to submit proposals on its future when these were sought from ACC and ICC. According to a Department spokeswoman: "It is up to them to send in their proposals to the Department. It is not up to us to look for them. They still have to come back to us with the details of what they want to do."

The Minister would not look at the issue until after the Budget, she added.

TSB is maintaining its position that it does not want to sell the bank by tender or "uncontrolled sale". When its original request to the Government for approval of the sale of the bank to NAB ran into difficulties and other prospective buyers emerged, the bank said it was not willing to engage in a tender process to arrange the sale of the bank. TSB ruled out a tender process on the grounds that it was not willing to open its books to competitors in the Irish market and because the trustees argued they were in the best position to decide who was the most suitable partner for the bank. Price was not the only issue, they argued, stating that they had to consider the longterm interests of their customers, staff and the bank itself.

With Ulster Bank, Irish Permanent and Irish Nationwide Building Society now interested in bidding for TSB, there is some validity in TSB's concern about competitors in the Irish market having access to sensitive competitive information.

While there appears to be no objection at official level to the sale of the bank, the Minister would want to ensure that any sale process is fair and open. It is understood that the trustees have been told by successive governments that a predetermined sale will not be approved. Any change in the status of the bank must be approved by the Minister for Finance and by both houses of the Oireachtas.

Under the 1989 Act, the proceeds of the sale of TSB would go to the Government. While the Minister for Finance must approve any sale, he cannot initiate any change in the structure of the bank.