Any company interested in acquiring TSB Bank will have to give an undertaking that there will be no compulsory redundancies before a deal is sanctioned, according to a document which has been circulated to prospective buyers.

It shows that staff will get 14.9 per cent stake before the bank is sold, with an element of shareholding given in return for changes in work practices.

The bank is seeking a buyer following a failed merger attempt with ACC, another State bank.

According to an information memorandum prepared for interested parties earlier this month, the employee share option plan (ESOP) will comprise two distinct parts - the acquisition of a 5 per cent stake by an employee trust in consideration for a change and flexibility agreement between the bank and its union and a further 9.9 per cent interest available for purchase by the ESOP. But it says "it is anticipated that this will be partly financed" by further productivity "enhancements" to be negotiated.

The standard working hours for full-time staff is 35 hours per week. The memorandum also shows that staff costs have risen from £29.3 million in 1997 to £34.8 million last year.

Staff numbers increased from 1,125 to 1,260 during the period and most are 21 to 45 years old. The figure has since risen to 1,330, with 85 per cent being members of a union.

TSB is a relatively small bank, with all its business based in the Republic. Earlier this year analysts suggested it had a market value of £140 million (€178 million) and £170 million. But others yesterday valued it at £200£250 million.

A purchaser must lodge a bid for 100 per cent of the bank, with the issue of the 14.9 per cent owned by staff being addressed at a later date.

The company's net interest income has grown steadily year-on-year to £88.1 million last year. TSB attributes this mainly to the increase in the mortgage book which grew by 26 per cent in the 14-month period to December 31st last.

Among those tipped to be interested in buying the bank are Irish Life & Permanent and Ulster Bank. Expressions of interest must be filed by mid-June.