The exchequer is likely to realise in excess of £200 million from the sale of the ICC Bank following the decision by the Government to seek offers for the state-owned bank.
The decision to sell the ICC includes conditions that guarantee the employment of the bank's 310 staff and also makes provision for staff to own up to 14.9 per cent of the bank under its new ownership through an Employee Share Ownership Programme (ESOP).
Virtually every Irish financial institution is seen as a prospective bidder for ICC, including AIB, Bank of Ireland, Anglo Irish Bank, Ulster Bank, Irish Permanent, Irish Life and Irish Intercontinental Bank.
Some foreign banks, keen to invest in the booming Irish economy, are also seen as potential bidders, although banking sources believe that a domestic buyer is more likely.
The Minister for Finance, Mr McCreevy, said that the first step will involve advertising for consultants to advise the Minister on the sale. It is understood that while price will be a major factor in deciding on the sale of the ICC, potential buyers will also be expected to submit plans for the development of the business.
ICC is currently involved in lending to small and medium-sized businesses and also has an active venture capital subsidiary which is particularly involved in management buy-outs. ICC managing director, Mr Michael Quinn, has already said the bank would prefer a buyer who is prepared to provide an extensive banking service with an emphasis on venture capital finance for small and medium-sized companies.
"We are more in favour of companies who want to grow the top income line and not companies who want to concentrate on rationalisation," he said at ICC's annual general meeting earlier this year. In a formal statement last night, the ICC welcomed the Minister's move and said the bank would work closely with Department of Finance officials to ensure a successful conclusion.
Mr McCreevy said that he will set up a Partnership Group made up of representatives of the Department of Finance, ICC board and management and staff and union representatives as part of the sale process. This group will deal with concerns identified by the staff in discussions the Minister had with them regarding their involvement in the process.
The Minister has also agreed in principle to a Telecom-style ESOP scheme under which the staff could obtain a 14.9 per cent shareholding in ICC under its new owner. He said that negotiations on terms and conditions of the ESOP will be conducted with the staff and that the terms of the ESOP will be subject to Government approval.
The MSF union, which represents the bulk of ICC staff, was formulating a response to the Government's decision last night but it has already publicly opposed the sale of the bank. On the ESOP, Mr McCreevy, however, expressly referred to "the principles already established in relation to other state enterprises and in particular Telecom Eireann". In the Telecom ESOP, 5 per cent of the shares were given to staff in return for changes in working practices with the remaining 9.9 per cent resulting from agreement by the staff to pay 5 per cent of their salary to co-finance the company scheme. There were no "free" shares, as such, involved in the Telecom ESOP, although it is generally accepted that the staff got an exceptionally good deal for the 14.9 per cent stake.
Like most banks, ICC has benefitted hugely in recent years from the strength of the economy and last year grew its profits by 24 per cent to £16.1 million. All sectors of the bank business exceeded their targets and the bank paid a dividend of £2.5 million to the exchequer. Mr McCreevy said, yesterday, that to support ICC development through the period of the sale, he has provided a further £15 million capital injection for 1998.
