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Seanad Éireann debate -
Wednesday, 4 Apr 2001

Vol. 166 No. 2

Trustee Savings Bank Act, 1989 (Section 57) (TSB) Order, 2001: Motion.

I move:

That Seanad Éireann approves the following order in draft:

Trustee Savings Banks Act, 1989 (Section 57) (TSB Bank) Order, 2001

copies of which were laid in draft form before Seanad Éireann on 30th March, 2001.

I welcome Minister of State at the Department of Finance, Deputy Cullen, back to the House.

Last December the trustees of TSB Bank formally requested the Minister for Finance to authorise the reorganisation of TSB Bank. Following consultation with his advisers, the Minister agreed to their request and published the Trustee Savings Banks (Amendment) Bill, 2000, which amended the Trustee Savings Banks Act, 1989, to provide explicitly for the sale mechanism as proposed. The amending Bill was enacted on 28 March last and in accordance with its provisions the Minister is now seeking the approval of this House for the draft order. Section 57(15) of the Trustee Savings Banks Act, 1989, as amended, requires the Minister for Finance to secure a motion of approval for the draft order from both Houses of the Oireachtas before making an order under section 57 authorising the reorganisation of a trustee savings bank.

Before dealing with the detail of the trustees' proposal and the draft order, it is important to explain that, under the 1989 Act, as it stood and following amendment, the Minister's powers allow him to authorise a reorganisation. However, the Minister cannot initiate a reorganisation as that right lies solely with the trustees of TSB Bank.

The proposal from the trustees, which was made following a fully competitive sale process, involves selling the assets and transferring the liabilities of the bank to the Irish Life and Permanent Group. The employees of TSB Bank are to benefit from an employee share ownership trust that was agreed along the lines of the ESOTs in both Eircom and ICC Bank. The offer from Irish Life and Permanent valued the bank at £339 million.

The trustees' request and accompanying documentation was examined by Arthur Andersen, the Minister's financial advisers, who advised him that the sale process had been carried out by the trustees and their advisers in an open, transparent and fair manner. Arthur Andersen further advised the Minister that the bid from Irish Life and Permanent plc represented full value for the bank and recommended that the reorganisation should be authorised. The Minister also benefited from the legal advice of Arthur Cox.

TSB Bank was created by the amalgamation of Cork and Limerick Savings Bank and TSB Dublin in 1992. TSBs had been severely restricted in their range of activities prior to 1989. They were required to maintain at least 80% of their customers' deposits with the Exchequer and could only lend to personal customers. In response to the changing situation in the financial sector and in order to deal with the fact that the original purpose of TSBs was no longer widely relevant, the Dáil provided in the Trustee Savings Banks Act, 1989, for a broadening of the range of activities of TSBs. The trustees have, with the agreement of the staff, reached the conclusion that the interests of all stakeholders in the bank will be best served by now moving on to the next stage of the process by changing the status of the TSB and merging with the Irish Permanent. This change will give the bank access to the capital markets, a wider product range and a broader set of delivery and distribution channels, which are all necessary if the bank is to continue to grow and prosper. Most significantly, it will provide continuity for staff and customers so that they can benefit from ongoing developments in the banking sector.

This merger is to be welcomed from a competition viewpoint because it will result in a very strong third force in the Irish retail banking market. The merged institution, which will trade as Permanent TSB, will have a 25% share of the mortgage market, 20% of the car finance market, 20% of life and pensions, 12% of the savings market and 10% of the current account market. Irish Life and Permanent plc informed the Tánaiste and Minister for Enterprise, Trade and Employment who confirmed that regulatory clearance for the acquisition was not required under merger law.

In reaching his decision to authorise the reorganisation, the Minister considered the issue of branch restructuring which will clearly follow the merger of the operations of two domestic financial institutions. The policy outlined to the Minister by the trustees was that the merged bank would not close both branches in a single location and that it would continue to serve all the communities served by either branch. On Second Stage in the House, I quoted the following public statement by Mr. David Went, group chief executive of Irish Life and Permanent plc:

Let me start by stating quite emphatically that, as a group, Irish Life and Permanent is committed to maintaining a strong branch network and Permanent TSB will have that. Our plans envisage a combined branch network of approximately 110 branches. In a simple combination of the existing networks of TSB and Irish Permanent, there is clearly an overlap of as many as 45 branches. To deal with this, Permanent TSB will initiate a comprehensive and objective evaluation of all the branches of the combined entity. This will identify those which, in terms of design, size and location, will be best suited to offering the combined customer base the full breadth of products in the most convenient and comfortable locations possible. And let me add, there will be no town which currently enjoys the services of either Irish Permanent or TSB Bank which will be left without banking services as a result of this exercise. And indeed we'll continue to review opportunities to open new branches.

Section 57 of the Trustee Savings Banks Act, 1989, was amended because the section, as it stood, was not suitable for the proposed reorganisation. This is hardly surprising as events had moved on in the past decade and new elements were introduced to sales of this type, notably employee share ownership plans.

Section 57 of the 1989 Act provided for the reorganisation of trustee savings banks into either a company controlled by the Minister for Finance or one not controlled by the Minister. The latter option is being adopted for the current process but, under section 57 as it stood, it was not possible to establish an ESOP in the TSB prior to the reorganisation as it does not have any shares. It is also impossible to establish an ESOP following the merger of TSB's operations with Irish Permanent because it is not possible to establish an employee share ownership trust for a particular group of employees within one company. Therefore, it has proved necessary to have an intermediate step. The assets and liabilities are being transferred to Kencarol Limited, a subsidiary of Irish Life and Permanent, at which point the ESOT will be established and then immediately transferred on, with the ESOT in place, to Irish Life and Permanent plc.

Even using this mechanism required an amendment of the legislation governing ESOPs because the existing legislation did not permit the establishment of an ESOP by a company while it is controlled by another company. This is the situation in Kencarol which will be controlled by Irish Life and Permanent at the time the ESOP is established. Accordingly, section 3 of the Act allows for the establishment of the ESOT in Kencarol Limited while it is controlled by another company. This exception is limited to companies resulting from a reorganisation under section 57 of the 1989 Act.

The employees are in favour of the transaction. Their employee rights, including conditions of employment, are protected by employee rights legislation, especially the provisions of the European Communities (Safeguarding of Employees Rights on a Transfer of Undertakings) Regulations, 1980 (SI 306 of 1980). This means that the employment of all employees of TSB Bank immediately prior to the sale is automatically transferred to the purchaser and that the same terms and conditions as they enjoyed with TSB will apply. This is expressly acknowledged in the business sale agreement between TSB Bank, Irish Life and Permanent plc and Kencarol Limited.

Pension arrangements fall outside the scope of transfer of undertakings regulations and, therefore, the business sale agreement provides for Irish Life and Permanent to continue the pension schemes in place in TSB prior to the sale. Accordingly, the draft order does not refer to the rights of employees, although reference is made to the employee share ownership trust.

Under that trust, 5% of the shares in Kencarol Limited will be transferred by the trustees to the ESOT in return for agreement to the flexibility agreement, and the ESOT is purchasing a further 9.9% stake in Kencarol Limited for £19.8 million. On completion of the reorganisation, the ESOT's Kencarol shares will be swapped for shares in Irish Life and Permanent plc worth £50.5 million. As with all other ESOTs, the ESOT must hold the shares for a period of three years before it can allocate shares to employees through an approved profit sharing scheme. The maximum tax efficient allocation by the APSS is £10,000 per annum per employee. Senators should note that while the flexibility agreement envisages redundancies, it is a requirement of the agreement that all redundancies arising from the transaction must be on a voluntary basis only.

Before dealing with the articles of the order, I wish to outline what will happen to the proceeds arising from the transaction. I will not address the issue of giving some of the proceeds to customers because it was dealt with comprehensively when the Bill was before both Houses. On the transfer day, which will happen this month but the date has yet to be confirmed, Irish Life and Permanent will pay the trustees £288.5 million and transfer 14.9% of the shares in Kencarol Limited to the trustees. The trustees will transfer 5% of the shares in Kencarol to the employee share ownership trust in return for the unions' agreement to abide by the terms of the flexibility agreement. The trustees will sell the remaining 9.9% stake in Kencarol Limited for £19.8 million to the ESOT. Following these transactions, the trustees will have £308.3 million.

Under the terms of the business sale agreement, the consideration paid by Irish Life and Permanent can be subject to adjustment depending on the net assets of the bank in the completion accounts. It is the Minister's intention to direct the trustees to pay about 80% of the proceeds, £247 million, into the Exchequer on the transfer day or as soon as possible thereafter. Following the final sign-off of the completion accounts and the payment or receipt of any adjustment to the proceeds, the trustees will discharge any outstanding liabilities arising from the sale process, mainly payments to their advisers, and pay the balance plus any interest arising on the sum to the Exchequer.

Regarding the articles of the draft order, the preamble sets out the legislative basis for the order and also stipulates what consultation was carried out in accordance with the legislation. Article 1 is a standard citation article. Article 2 defines certain terms used in the order. Article 3 (1) authorises the reorganisation of TSB Bank into Kencarol Limited. Article 3(2) provides that all assets and liabilities, including deposits, transfer to Kencarol Limited. Article 3(3) permits the trustees to sell shares received by them as consideration to the ESOT. This refers to the 14.9% stake in Kencarol which will be received by the trustees from Irish Life and Permanent as part of the consideration. Article 3(4) provides that the trustees shall make an interim payment to the Minister of such amount as the Minister directs in writing. The Minister will also direct when the balance of the money is to paid. I have already discussed this matter.

Article 3(5) provides that the trustees shall prepare and submit audited financial statements for the final period of TSB Bank as a trustee savings bank. Article 3(6) requires the trustees to provide audited accounts for the period between the transfer date and the final payment provided for in article 3(4) within 45 days of the payment. Article 3(7) provides that the trustees shall vacate office on a date to be determined by the Minister following the payment of all moneys received by them and the submission of audited financial statements as provided for in article 3(6).

Article 3(8) permits the use of "TSB" or "TSB Bank" by Kencarol Limited, Irish Life and Permanent plc and any of its subsidiaries subject to the Central Bank Acts and the conditions set out in the schedule to the order. Article 3(9) provides for the supervision by the Central Bank of Kencarol Limited following the transfer of TSB Bank to it and prior to its transfer to Irish Life and Permanent plc. The assets and liabilities of TSB Bank will only be vested in Kencarol for a very short period to facilitate the establishment of the employee share ownership plan. Despite the shortness of the period, it is clearly important to have continuity of supervision by the regulator.

Article 4(1) authorises the reorganisation of Kencarol Limited into Irish Life and Permanent with effect from the completion of the agreement to do so dated 1 February 2001. Article 4(2) provides for the transfer of all assets and liabilities, including accounts from Kencarol Limited, to Irish Life and Permanent plc. Article 5 deals with all the consequential provisions of both transfers. I draw the attention of Senators to the definition of transferee in article 2(1) which defines it as Kencarol Limited in the first instance but "on and from completion" defines it as the holding company, Irish Life and Permanent. Article 5, therefore, covers the transfer from TSB into Kencarol Limited and the transfer from Kencarol Limited into Irish Life and Permanent plc.

I will not go through the sub-articles of article 5. They have been included so as to provide legal certainty on matters arising under these transactions, including contracts, agreement, accounts, securities held by the bank, property of the bank, legal proceedings for or against the bank and such other matters as have been considered necessary by the parties to these transactions.

The schedule to the order stipulates the conditions attaching to the use of TSB or TSB Bank by the Irish Life and Permanent Group as provided for in article 3(8). The 1989 Act prohibits the use of the words "trustee savings bank" or its derivatives by any body other than a trustee savings bank. Section 57(11) of the 1989 Act, as amended, permits the use of TSB or TSB Bank, subject to conditions stipulated by the Minister after consultation with the Central Bank.

Condition 1 allows the use of either in conjunction with one or other words, excluding the words set out in parentheses. This is the course being followed by the purchaser which will trade as Permanent TSB. Condition 2 allows the use of either TSB or TSB Bank on their own, provided it is accompanied by the words "a subsidiary of .." in legible characters and in a reasonably prominent position. Condition 3 limits the right to register TSB or TSB Bank as a trade mark, design or intellectual property to the Irish Life and Permanent Group, and it requires them to obtain the prior consent of the Minister before disposing of or licensing the use of the name to another party. Condition 4 requires Irish Life and Permanent plc to obtain the consent of the Minister before selling a subsidiary which bears and would continue to bear a name including TSB or TSB Bank. This does not apply to Irish Life and Permanent plc which is a publicly traded stock and is therefore subject to the rules of the Takeover Panel.

I pay tribute to the trustees of TSB Bank and their predecessors who have done this country and many of its people a great service over the years in providing financial services that were accessible to everyone. I also thank the staff and the management for their commitment and professionalism over the years and wish them and the Irish Life and Permanent Group every success going forward.

I wish to share my time with Senators Ryan and Ross.

Is that agreed? Agreed.

Many of the issues about which the Minister spoke this morning were raised on Second and Committee Stages which took place here recently and I do not intend to revisit them.

Section 57 of the Trustee Savings Banks Act, 1989, provided for the reorganisation of trustee savings banks into companies. This section was included because of the widely held view that the trustee savings banks should be formed into companies in order to enable them to adjust to the financial markets. Section 57 of the Trustee Savings Banks Act, 1989, empowers the Minister for Finance to authorise the reorganisation of the Trustee Savings Bank into a company the composition of whose board of directors would be controlled by the Minister, or into a company the composition of whose board of directors would be controlled by a person other than the Minister.

In the Trustee Savings Banks (Amendment) Bill, 2000, the latter option was adopted. Section 57 was restated in that Bill in its entirety but in an amended form because, under section 57 as it currently stands, it was not possible to establish an ESOP in the TSB given that it has no shares. It was also impossible to establish an ESOP following the merger of the TSB and Irish Permanent because it is not possible to establish an ESOP in a particular group of employees within one company. In order to overcome these difficulties, the bank's assets and liabilities were transferred to Kencarol, a subsidiary of Irish Life and Permanent. Kencarol is referred to as the trans feree in the draft before the House. To allow the ESOP to be established and then transferred to Irish Permanent, a holding company had to be established which is referred to as Irish Permanent in the draft.

The document before the House establishes two requirements – the reorganisation of the TSB into the transferee and the reorganisation of the transferee into a holding company. In legal terms this accomplishes the aims of the recent Bill. Under section 57 of the 1989 Act it was necessary for the Minister to bring a draft before the Seanad and the Dáil. I am pleased to approve the draft as presented.

I concur with the final part of the Minister's speech where he pays tribute to the Trustee Savings Bank and its staff. On Committee Stage, Senator Denis Cregan, in his colourful way, paid tribute to the Trustee Savings Bank, especially the one in Cork, when he referred to the fact that it collected the pennies of the people. In our recent discussion on the Finance Bill, the Minister for Finance said, in dealing with the new savings scheme, that he was anxious to re-establish the culture of saving. The Trustee Savings Bank played a major part in creating that culture in Irish society. I hope that when the new organisation is established it will continue that tradition.

Mr. Ryan

I do not intend to go back over what has already been said. However, there are two issues about which I am concerned. I have reservations about dealing with something of this complexity by way of subsidiary legislation. This is a genuine issue. If this were ever legally challenged, I doubt that the courts would find that dealing with this level of complexity in subsidiary legislation was in accordance with the Constitution. This is extremely complex, and that the Houses of the Oireachtas cannot debate it and amend it section by section is, at the very least, open to question. It is not my intention to be awkward. I would say that about anything as complex as this.

My other question relates to whether the Minister is aware that the structure of the ESOP is being investigated by the Equality Authority which is satisfied that, prima facie, it discriminates against certain categories of people who are covered by the equality legislation, in particular married women and older people. It is very unsatisfactory that something like this is being processed. It does not matter that the trade unions are in favour of it. They are no more above the law than anybody else. The trade unions may have approved of it, but the Equality Authority is on record – and I can give the Minister a copy of its letter – as saying that it feels it is worthy at least of investigation and that there is discrimination in that certain categories of people, against whom discrimination is prohibited, are treated less favourably than others.

Mr. Cullen: The legislation does not prevent a resolution of that matter. That is an internal matter.

Mr. Ryan

Would it not be sensible to await the Equality Authority's views before pushing this through?

It would not reshape the legislation in any way.

Mr. Ryan

It would not. However, it would be easier to sort out the problem of the ESOP before this goes through than it will be after. That is common sense. The legalities of it are secondary. That is all I have to say on it, but I invite the Minister to reflect on it. Senators Cregan and Doyle asked who will provide savings facilities for the poor given that the banks are pulling out of poor communities and that the post offices are also in danger of doing so. Only the credit unions are left, and they are under considerable pressure from the banking sector to become like banks, in which case they too will pull out. There is a fundamental issue in terms of the financial services available to poor people, people with small savings, small incomes and, therefore, small transactions. Who will provide for them given that most institutions are competing for the custom of those who, like myself, have plenty of money, and leaving out of their equation the 25-30% of our population who need banking and savings services, who need the security of those services and who soon will not have geographical access to them?

I thank Senators Doyle and Ryan for agreeing to share time with me. I have a certain amount of doubt about this scheme. I agree with Senator Ryan that it is complex. I have read it, I have listened to the Minister, and I admit I do not understand exactly how it will work.

It is along the lines of the ICC and the Eircom employee share option schemes, and the experience of those two companies in having an ESOP of this sort is not a very happy one. It has never been publicly admitted, but it is whispered around the financial institutions that one of the reasons the Government had such incredible difficulty in selling the ICC initially was because of this guaranteed gift of a 14.99% shareholding to employees. It was not all a gift, although some of it was, but the shares were certainly cheap. The problem was that predators and other banks in the market did not like what they saw because they considered the 14.99% ICC employees' holding as a blocking share. They saw a powerful union taking non-commercial decisions which could cause difficulties for them if they took over the company. That is one of the reasons, although not the only one, the ICC had a "for sale" sign outside its premises for many years, yet nobody responded. In the end, the Minister did a good deal in selling it to the Bank of Scotland which bit the bullet. Had this particular model of ESOT not been in place, however, that would not have happened; the Minister would have sold the ICC much earlier and would have received more for it.

In the case of Eircom, a 14.99% shareholding has again been given, or sold at preferential levels, to the workforce but it is doubtful whether the workforce has given anything really tangible in return. We are told that this represents a change in practice but when we ask what the change is, we are expected to accept a lot of blancmange involving rather inexplicit apologies for what virtually amounts to nothing. In order to sell off the TSB, ICC and Eircom, the Government has decided to sacrifice 15% of each company. In other words, it is handing over 15% of what is rightly due to the taxpayer. That may be the price the Government has to pay, but it will not get as much for the company as a result because the 15% just comes off the price the Government receives from the purchaser.

In the case of Eircom we now have an interesting situation – although I will not make a judgment on it – because if the deal with Vodafone goes through there will be a bid for the fixed line business. According to press reports this week, one of the bidders, Mr. Denis O'Brien, is apparently in talks with the ESOT because he has to have its approval in effect, although not in law, in order to take over the fixed line business. This is because to make an offer unconditional one has to have 80% of the shares. The 15% shareholding held by the ESOT does not amount to the extra 20% but it is so close to it that it is inconceivable that Mr. O'Brien could do it without them.

Is it right that we should base the sales of State assets on this particular model which, after the sale, allows a blocking group of shares to deny the market its natural course? That may or may not be a good thing but it is something we have to consider. We must realise that this will happen because the flotation of Aer Lingus is coming down the line also.

Aer Lingus will be difficult to float because of the experiences of some of the other flotations. One of the problems of the Aer Lingus flotation will be this particular model which the Minister is selling to us today. While nobody can blame the workforce or the unions, as sure as night follows day, Aer Lingus staff will receive 14.99% of the shares. Aer Lingus will then go to the market and say, "Yes, this is the way we do things in Ireland. We give 14.99% to the workforce." Some of the institutions will freak and will say no. The reality is that anybody who wants to buy the company or a big block of its shares will refuse to do so.

As long as the Minister is aware of that, that is all right. Personally, however, I think it is too high a price to pay because it is impeding the free market. A special group of companies is being created. Eircom is not like other companies in the telecoms market because 15% of its shares are held by a blocking group which is the workforce. For exactly the same reasons, Aer Lingus, when floated, will not be like other companies of that sort around the world with which it is being compared. ICC has gone now, so that does not apply. If we are always to take this route for short-term gain, we will suffer in the long term because the way the market considers these companies will be totally different from the way it regards other similar companies around the world. It will be the Irish way of doing things. It may be a way of getting the company floated but it will mean that we get less for the company in the end. That is the price the Government has decided to pay because it has decided to give in to union demands on this issue. It is a pity the Government has decided to do so because there are other ways of doing it. The question is one that should be raised but I will leave it there if the Minister is not replying.

As we have heard in all cases of this sort, the Minister says that in return for this ESOT, the workforce and unions will agree to what he calls a flexibility agreement. I wish to ask the Minister what the reciprocation is, however. I asked this question in the case of Eircom, and will do so in the case of Aer Lingus also. In deals of this sort there should be some material consideration. In the case of ICC some people got £100,000 worth of shares and in the case of Eircom also they received a huge number of shares. In this case they will receive tangible monetary value but I would like to know what is being given by the workforce in return. I suggest that it is very little. This is a bit of camouflage to protect the Government's position and pretend that these work practices, which should have gone out with the Ark, are going to stay there forever. They could not have stayed, however, if a State or semi-State company was to survive. The Government is giving what it had to give anyway, and is getting a large sum of money in every single case.

It is wrong for the Minister to give a concrete, material value per employee which can be measured in every case. An arrangement should be made for serious profit sharing. In the case of Eircom, Aer Lingus, ICC, and in this particular case, why can the entire workforce, from top to bottom, not be given share options? That is obviously the most effective way of doing it. It will cost the Government nothing in terms of sale, it will mean that the Government gets more money and that the workforce will have a real stake in the future of the company. The workforce would be given an opportunity to make more money if the company is successful. They would have the potential to make more money, the company would have a greater engine behind it to make more profits, and it would cost the Government nothing. With this model, however, the employees are getting money for nothing, the Government is losing, and the unions have too much blocking power. By championing this model of flotation, the Government has created a company which is not as competitive and not as attractive for anyone to purchase.

I welcome the Minister of State, Deputy Cullen, to the House. I am glad to have the opportunity to contribute to the debate on this motion of approval of section 57 of the amended Act of 2000. All we are doing here today is providing the legislative framework for what is the sale of a bank and the arrangement of all the parts of that sale. It is appropriate that this order is in the House today because that is the way legislation should operate.

The sale of the bank to Irish Life and Permanent was appropriate and opportune because as it stood, the TSB could not lend to anybody except its own customers. It had to invest its money in the Exchequer and it was not really a commercial enterprise that would survive in the commercial markets of the year 2001. It was a proper decision by the Minister for Finance to agree to the sale following the advice of his financial advisers and the knock-on effect is that there will be a windfall of approximately £330 million to the Exchequer. That is an important sum of money because some of the money from similar sales of State assets, including Telecom, was invested in the fund for social welfare and public service pensions. I understand there is approximately £5 billion in that fund currently following legislation passed through this House not long ago. I hope the windfall from this sale will be used wisely to invest in the pensions fund, reduce the national debt or something in that area. The Minister's track record in the management of the country's finances will ensure that this money will be used in the best interests of the citizens.

Much has been said about the employee share ownership trust. That issue was debated on Second and Committee Stages of the Bill—

And last week in the Finance Bill.

—and in the Finance Bill but it has been explained at all times both by the Minister of State, Deputy Cullen, and the Minister, Deputy McCreevy, in the debate on the Finance Bill that this arrangement was agreed between the employees and the bank, and it had the full support of the union. It was also explained that for any change in that arrangement to take place, it was not necessary to change the legislation, yet this red herring is introduced on a continuous basis to imply that something has been covered up. We heard it again from Senator Ryan this morning. How many times does the House have to be told that this is a voluntary arrangement entered into by the bank and its employees—

And supported by the unions.

—and supported by the trade unions? There is no more the Minister can do. If he were to do the opposite, I have no doubt that the first people on their feet here would be Senator Ryan and his colleagues to complain that we were not prepared to go along with what the trade unions had agreed with the employees. It appears to be opposition for the sake of it and that it has nothing to do with the reality of what is taking place.

This is a reorganisation to the transferee and from there to the holding company. That arrangement had to be entered into and it is provided for in legislation and by order today for Permanent TSB to operate and put its house in order. It is nothing more than that and this House should endorse the order. I commend the motion to the House.

I thank Senators for their contributions. We had a lively and interesting debate. When we brought the Bill to the Seanad in recent weeks many important points were made. I hope I have clarified all the matters in some detail for the Members of the House.

This morning I listened carefully to what the Senators had to say and again emphasis was laid on the fact that people saw the structure of this particular deal as complex. I suppose at first sight it is complex but I have been open and direct in explaining the reason Kencarol Limited had to be used as a vehicle in the first instance to move the TSB Bank into Kencarol before moving on to Irish Life and Permanent plc. While that is complex, the logic and the benefits are clear to the employees, particularly in terms of the ESOT. That is the mechanism we have chosen to ensure that whatever is agreed among the trade unions, the employees and the management structure in the bank, the State would deliver a smooth transition to the company in recognition of all the changes that will be made.

I would not necessarily agree with everything Senator Ross said. Employees in many of these companies have benefited from these share ownership schemes and they understand that their continued excellent performance is important to ensure that the value of the shares in the company continues to grow and thereby benefit, both individually and collectively, all the employees in the company. There is a direct vested interest here and I would not necessarily agree with what Senator Ross said.

This has been an interesting exercise over the past few weeks and months. It is an interesting time generally with the sale of the TSB, the ICC, the ACC and everything that has been happening in this area. The figures I gave this morning in the context of the structure of the new bank are interesting also. The new bank will be an important third banking force in the country. Permanent TSB will have a 25% share of the mort gage market, a 20% share of the car finance market and 20% of life and pensions. They are serious figures in the marketplace and all of us, both as citizens and customers of various financial institutions, wish the bank well. We all want to see more competition in the marketplace and more and better schemes put before customers to ensure they get best value for their investments or, if they borrow money, that they get the best possible options in that regard.

This is an important step forward which will singularly benefit people. I wish Irish Permanent plc and TSB well, as I am sure does everybody in the House. This has been a good day's work for all of us involved in the Houses of the Oireachtas and I look forward to the bank's continued growth and success in the future.

Question put and agreed to.
Sitting suspended at 11.50 a.m. and resumed at 12 noon.
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