The future ownership of ICC Bank should be clear by the end of July, according to company chairman, Mr Phil Flynn. The information memorandum for the sale of the State-owned bank has been drawn up and will now have to be checked by the bank's advisers and the advisers to the Department of Finance, he explained.
On the basis of the latest profit figures and buoyant market conditions, the bank could fetch over £250 million to £300 million (€317.66 million to €381.19) for the Government. When the Department finalises the appointment of its financial and legal advisers to the sale, and when the memorandum is cleared for release, "expressions of interest" from prospective purchasers will be sought. Advertisements are expected to be placed, inviting prospective purchasers to signal their interest - this is aimed at attracting the widest possible field of purchasers.
There is a healthy level of interest in the niche banking operation focusing on the small to medium sized business sector, so the sale is expected to generate a good premium over current market values. Bank of Ireland, Irish Life and Permanent and Irish Intercontinental Bank are among the institutions that have confirmed their interest in acquiring ICC.
It has not yet been decided exactly how the sale process will be handled. In the original request document for tenders from advisers, the process was divided into two phases. The first phase related to ensuring that the prospective purchasers had the capacity to ensure ongoing funding for the bank. This involves having both capital to fund future growth and to back taking over the State guarantee, which currently covers about £730 million of the bank's deposits.
The second phase involved the prospective purchasers producing business plans and indicative prices. What has yet to be decided is at what stage prospective purchasers will be given the full information memorandum on the bank. The choice is between giving fairly general information initially until those without the required capital backing are screened out or giving the full memorandum to all prospective purchasers at the outset.
Once the expressions of interest have been assessed, some or all of the interested parties will be asked to submit their business plans for the future development of ICC and indications of the price range they will offer. Plans for the future of the bank will be requested to be submitted in a standard format, Mr Flynn explained. The Department of Finance and its advisers, as well as the bank and its advisers, will then sift through the plans to find the best fit for the bank . By the end of July, Mr Flynn expects that agreement will have been reached with a purchaser, though he said some regulatory and technical issues may remain to be dealt with.
"But we will be at the end of our process and we will know where our future lies," he said. ICC's definition of a partner that would be "a good fit" is one which will "facilitate us doing what we do best and let us get on with it," Mr Flynn said. Throughout the process, there will be consultation with and participation by the unions representing the bank's 300 employees, Mr Flynn said. The Minister for Finance has given a commitment that ICC employees could get a stake of up to 14.9 per cent in the operation, similar to the stake to be given to employees of Telecom Eireann.
Negotiations are currently underway on how the employee stake will be given - how much must be bought, the price per share and what stake will be given on a non-cash basis in return for concessions from the employees. One issue arising in the negotiations is that the unions feel employees should be granted shares for concessions and flexibility already given at ICC, while the Department expects to give shares for future concessions. Describing the employee share option plan as a matter between the Minister and the unions, Mr Flynn commented that there has been substantial change at ICC, with administrative costs steadily declining.
"We have had substantial change and flexibility here, and a lot of that is down to the staff", he said. As its contribution to these negotiations, the ICC board and management will be expected to advise the Department on the changes they want to achieve in coming years as well as information on the achievements in recent years.
