The 350 staff of the State-owned ICC Bank will get the equivalent of £117,000 (€148,560) each following its sale to Bank of Scotland for £275 million.
The 15 per cent of ICC that its staff are entitled to will be exchanged for Bank of Scotland shares worth an equivalent amount. A trust set up by the staff under an employee share ownership plan will be given 5 per cent of the company and then buy a further 9.9 per cent. This will be completed prior to the sale. The shares will be paid for by a loan and a cash contribution from ICC.
The deal is expected to be approved by the Dail within two weeks after which the Minister for Finance, Mr McCreevy, will give an "irrevocable undertaking" to accept the bid.
The Minister has kept the door open for other bids for ICC. If a rival offer emerges before the middle of January, Mr McCreevy can accept it as long as it is at least 10 per cent higher than Bank of Scotland's.
In that case the Minister must pay the Scottish bank £2.75 million in compensation. A similar payment is triggered if the Minister backs out in the next two weeks for other reasons and subsequently sells the bank to a third party within six months.
A small number of shares - less than 1 per cent - are owned by private individuals. Those shares were issued when the bank was established in 1933 and will be bought back by Bank of Scotland. The shareholders include the Ginnell family from Mullingar, Co Westmeath, which owns 460 shares and Mr Joe Davy and Mr Brian Davy of Davy Stockbrokers, who own 250.
ICC will operate as part of Bank of Scotland's business banking division, which is responsible for the Scottish group's existing Irish operation, the former Equity Bank, now known as Bank of Scotland (Ireland).
The two business banks will be integrated over the next nine to 12 months, according to Mr Colin Mathew, the head of the division. The Scottish bank's successful mortgage operation, which sells to people in the Republic from Britain, will not be involved in the integration.
Mr Mark Duffy, the chief executive of Bank of Scotland (Ireland), will become chief executive of the enlarged group and Mr Phil Flynn, the chairman of ICC will be chairman. Mr Michael Quinn, the chief executive of ICC is to step down, but will remain as a non-executive director.
ICC will continue to operate under its own name for the time being but the emphasis will be to build the Bank of Scotland brand, said Mr Mathew. Mr Quinn and the other management of ICC will receive no benefit from the sale other than as members of the staff share plan.
The future of ICC's successful venture capital arm has not been decided. For the time being, it will remain part of the enlarged Irish banking operation but may subsequently be integrated into Bank of Scotland's venture capital business, which is not part of the business banking operation.
Bank of Scotland plans further expansion in the Republic, according to Mr Mathew. Following the takeover of ICC, it will have roughly 13 per cent of the market for small and medium-sized enterprise business banking. "There is scope to grow that," he said.
Bank of Scotland is in talks with British mortgage lender Abbey National and National Australia Bank is looking to get involved in the deal. Mr Mathew declined to expand on the prospect of the enlarged Bank of Scotland operation linking up with National Australia Bank's operations here - National Irish Bank and Northern Bank. "We live in interesting times," he said.
The attraction for ICC is that it will be part of a significant bank, with a strong reputation, he said. The deal has been recommended by the directors of ICC. The takeover of ICC will also need the approval of Bank of Scotland shareholders.
