Contrast the following. Irish Permanent Building Society, with no share capital, wanted to break out of its mould and become a plc. It rewarded its employees, depositors, or members, and mortgageholders, with free shares so they could share in potential rewards.

Trustee Savings Bank (TSB) also has no share capital and wants to sell out. Its employees have been promised a nice slice of the equity once it becomes a plc, but the Government nobbles virtually all of the proceeds. Where is the equity?

The Government's plan to sell ICC and TSB has been portrayed as a great success: a bonanza for the State, and lucrative handouts for employees.

But the ICC and TSB are two totally different groups.

ICC has been funded by the Exchequer and has a share capital which is owned by the State. TSB has, in effect, been funded by its depositors. Indeed, prior to the TSB Act 1989, the State was a net beneficiary as 80 per cent of the trustee saving banks deposits had to be lodged with the Exchequer.

Some TSB depositors are already grumbling about being left out. But ownership of the trustee savings banks had been a debatable point until it was fastened down by the 1989 Act. When the government in Britain announced the privatisation of such banks there in 1986, Scottish depositors successfully challenged the decision on ownership. However, this was overturned after a British government appeal to the House of Lords. In his judgment, Lord Templeman said legislation since 1817 had enabled savings banks to volunteer for "nationalisation"; trustee savings banks and their assets belonged to the state, subject to the powers of the TSB central board set up by law in 1976 to oversee them, and the TSB was itself an institution of the state. The (British) law of 1985 had merely privatised the TSB and arranged for its assets to be presented to the successor companies.

The House of Lords judgment was laid down before the Irish TSB Act 1989 was enacted. Debating the Bill in the Dail, the then Minister For Finance, Mr Albert Reynolds, said: "the legal advice to me is that the Oireachtas has the power to dispose of the assets of the trustee savings banks or alter their status as I see fit." Whatever about the legal rights prior to 1989, section 42 of the Act enacted that year, gives the residue to the State in the event of a winding up and section 57 allows the State to take the residue in the event of a reorganisation.

But the trustees are all important.

Under Section 23, the property of the TSB is vested in the trustees for the time being. In the past they have shown spirit. In 1997, for example, they opposed the sale of the bank by open tender which was the Department of Finance's favourite option then. However, they could have negotiated on behalf of the depositors insisting that part of the proceeds from the offer go to them, but didn't. While the purposes of setting up building societies and trustee savings banks were very similar, there are legal differences between them.

Members of building societies have votes and own the societies. A building society may convert into a plc by passing a conversion resolution. However, not only do the owners - i.e. depositors - have a vote on the resolution, borrowing members - i.e. mortgage-holders - are also given a vote by the Building Societies Act 1989. This presumably is because they have an interest in any change to the society's legal status. In recognition of mortgage-holders' voting power, all conversion schemes to date have given "free" shares in the converted company to both depositors and to mortgage-holders - for example Irish Permanent and First National.

The rationale is also that the value of the society prior to conversion has been created by depositors and borrowers.

The new owners of the converted company consequently include depositors, mortgage-holders, and the shareholders who purchase any extra capital raised at the time of conversion. On this basis, it could be argued that while the TSB is technically owned by the Government, when value is derived by changing its legal status, those who contributed to the value should be rewarded.

That is not the case with the TSB; only its employees and the Government are being rewarded.

In the UK, TSB depositors were treated better as the larger depositors were given a preference in the allocation of shares during TSB's privatisation.

Ownership of trustee savings banks was not clear cut prior to 1989. But based on the TSB Act 1989, a legal challenge would prove difficult.

However, there are still a number of processes to go through. The TSB will have to be changed to a plc and the €430 million takeover by Irish Life and Permanent will have to be approved by both houses of the Oireachtas, according to Section 57 of the Act. The Oireachtas will be given the opportunity to discuss the new Trustee Savings Banks (Amendment) Bill 2000 which is scheduled to be published tomorrow.

Elected members will have to ask themselves how this Bill squares with their advocacy for fairness in society.