Michael Noonan
Question:26 Mr. Noonan asked the Minister for Finance the reason he has withdrawn ICC Bank from sale; and the steps, if any, he will take to support it. [27166/99]
Priority Questions. - Sale of ICC Bank.
The Government decided on 27 July 1998 to dispose of the State's interest in ICC Bank plc. The motivation for this decision was that there is no significant strategic or policy need for continuing direct State involvement in the banking sector.
In February of this year I appointed ABN-AMRO and McCann FitzGerald to advise me in relation to the corporate finance and legal aspects of the sale of my interest in the bank. During the following months officials of my Department and my advisers worked with the board, management and staff of ICC Bank to prepare the necessary documentation in relation to the sale, to negotiate an employee share ownership trust and to agree the procedures for the sale process.
At the end of the first stage, three indicative bids were received. It was decided that all three should enter into stage 2 of the sale process, where they would be permitted to carry out due diligence on ICC. One of these banks, National Australia Bank, withdrew from the process shortly thereafter, without commencing due diligence. The two remaining banks undertook a preliminary due diligence exercise on ICC and also availed of the opportunity to meet with key management and union officials. One of these parties, Irish Intercontinental Bank, then withdrew at a late stage and a single second stage bid, from Bank of Ireland, was received by the deadline of 19 October 1999. Its bid was substantially less than the top range of the earlier indicative bids.
Following consultations with the board of ICC Bank, the receipt of advice from my financial advisers and a discussion with senior representatives of Bank of Ireland, I issued a press release confirming that Bank of Ireland would be admitted to the final due diligence process. I informed Bank of Ireland at that stage that I was not happy with the price it put on the table and that I wanted this increased. I saw no point in terminating the process prematurely without seeing what the outcome would be.
Bank of Ireland made it known to me on Monday 6 December that it no longer wished to proceed with the acquisition. It fully acknowledged the strengths of ICC Bank in its specialist market segments but felt that acquiring ICC Bank was not the best way to develop its SME lending business. In the light of this turn of events, I withdrew ICC Bank from sale for the present.
I have every confidence in ICC Bank going forward. I am now providing for the extension of its borrowing requirements in the ICC Bank Bill, 1999, which has passed all Stages in the Oireachtas and is with the President for signature for enactment into law. Going forward, it is my intention to ensure that the bank remains adequately capitalised while it is under State ownership.
The board, management and staff of ICC Bank have fully co-operated with the change process over the past months. I fully appreciate the role they have all played in the process. At all times their focus has been on building the quality and profitability of the bank. While all parties share the disappointment of a deal not being finalised at this juncture, the commitment of all the stakeholders of the bank remains undiluted.
I will now be asking the board, management and staff to consider the options for the future of the bank in the light of current developments. I will fully consider all the options for a way forward on receipt of the views of these parties.
I put it to the Minister that he has been extremely foolish in persisting with negotiations with one possible purchaser since 19 October and that his embarrassment is effectively his own fault and due to his imprudence in persisting when only one possible institution was willing to buy ICC Bank.
On 19 October when there was only one final bid on the table – maybe the Bank of Ireland – I consulted my advisers and met the Bank of Ireland, as I outlined in my reply. I did not make it clear to Bank of Ireland my views at that stage but I was advised – I agreed with the advice – that it would be premature at that stage not to allow Bank of Ireland to proceed further with due diligence, which is what I did.
On Monday, 6 December Bank of Ireland informed me that it was no longer interested in acquiring ICC Bank. It would have been foolish for me on 19 October not to allow Bank of Ireland to proceed with due diligence. It had participated in all stages of the process, was the only one left in the sale and we proceeded. It informed me on 6 December that it no longer wished to acquire ICC Bank and I then withdrew the bank from the sale process.
What will this latest fiasco cost the taxpayer by the time the various advisers to which the Minister referred are paid for work which, effectively, did not conclude?
I do not have the information with me at the moment but a number of advisers are involved. ICC Bank had its advisers and I, as Minister for Finance, had others. When the final bills come in, we will be able to let the Deputy have them. The process in which ICC Bank engaged in the lead up to this will stand to it in the future. I have withdrawn it from sale for the present and will reconsider the matter after discussions with the ICC Bank board and management in the near future. Much of the work that has been done will be of benefit to the ICC. The cost will be ascertained in the future and I will not have any difficulty in letting the Deputy know the final figures when the Department has them.