Nora Owen
Question:108 Mrs. Owen asked the Minister for Finance the benefit which will accrue to people who are working in ICC when it is taken over by a company (details supplied); and if he will make a statement on the matter. [30124/00]
Written Answers. - ICC Bank.
In line with Government guidelines, the staff of ICC Bank will benefit from an employee share ownership plan. The ESOP was negotiated earlier this year between the management and staff of ICC Bank and was recommended to me by the board. It was based on a valuation of £200 million, which was related to an end 1999 price.
The ESOP consists of two elements a 5% stake in exchange for a transformation agreement, and a further 9.9% through purchase on an optional basis.
The main elements of the transformation and flexibility agreement are: increasing the hours in the working week; outsourcing of services; open-ended option to reduce staff numbers on a voluntary basis; transfers within the bank; changes in duties; closer linking of performance and reward; no cost increasing claims to be submitted for a period of three years; and continuation of staff flexibility.
The purchase of 9.9% of the shares in ICC for £19.8 million is funded through increased pension contributions, borrowings, dividends and a 5% profit share arrangement subject to a cumulative limit of £6 million.
Based on the value of the offer made by Bank of Scotland of £275 million the 5% element which relates to the transformation of ICC would be worth about £40,000 to each staff member. Again based on the offer price, the staff would, having purchased the 9.9% stake for £19.8 million, get a further benefit amounting to an average of £20,000 per employee.
It is likely to be at least four years before staff receive any benefit with the final benefit being received at the end of 20 years.
In order to qualify for the full allocation of shares, the employee needs to have joined the bank by 1 January 1998. Those with a shorter service with the bank will receive reduced allocations.
There will be a notional allocation of shares on 1 February 2001 and 1 July 2001.