Unions representing staff at ACC Bank will meet Mr Phil Flynn this week to try to find solutions to the management/unions problems delaying the proposed merger between ACC and TSB Bank.

The Minister for Finance, Mr McCreevy, appointed the former trade unionist to help the sides to agree structures for merging the two banks. He is expected to seek an agreed programme for negotiating the key problems in the weeks ahead.

Despite the difficulties, a TSB spokesman insisted the merger would go ahead. "The game is still on and we are working towards solving our problems," he said.

The issues between the management of New Bank - the merger vehicle headed by Mr Harry Lorton - and the union SIPTU which represents ACC staff revolve around the right of management to manage, a bank source said.

"There are a lot of problems but at the end of the day it boils down to a big difference in views. Our view is that management must make the decisions in the best interests of the organisation and if there are implications for staff then these issues will be negotiated with the unions. But the unions at ACC seem to want decision making power."

The union complains that management's behaviour "is guaranteed to ensure the merger will not happen".

A union source instanced how the decision on the merged bank's information technology was made and how the consequences of that decision were dealt with. "Staff were called in and told they would have to relocate to Cork. They were given no option of alternative employment," he claimed.

"Management seem to be happy to have staff agree to the merge but they do not want the employees involved in any other decisions. They just want to discuss the impact of their decisions."

Mr Flynn's role is to identify the issues blocking the merger and to facilitate the design of a suitable partnership structure for the banks. He has already had initial meetings with both sides and will meet SIPTU members and officials tomorrow and members of the ATGWU and Mandate which represent the TSB employees later this week.

Mr Lorton and his team are working on a "transformation" document which will become the blueprint for the merger of the operations of the two banks and the flotation of the merged bank on the Stock Market. ACC has 600 employees and TSB has 1,100. The merger is likely to lead to some voluntary redundancies and the closure of some branches.

One union source said that while the merger "may go ahead because there would be some protection for employees in a stronger bank" the flotation may not proceed as scheduled.

"The question must be, given what is going on at First Active, is it necessary and would it mean job losses and cutbacks for staff in the longer term?"