Bank of Ireland is to run a new save-as-you-earn (SAYE) share option scheme being launched by Waterford Crystal.

The bank, which has been approved by the Revenue Commissioners to act as an authorised savings carrier for SAYE schemes, will provide administration and investment services for the scheme.

SAYE schemes were authorised in the 1999 Finance Act in an effort to encourage employee share ownership. Under such schemes, which are common in Britain, employees receive options to purchase shares in their employers' business at the price prevailing at the time the option is granted or, in certain circumstances, at a discount to that price.

To pay for the shares, the employees agree to save between £10 and £250 per month for either three, five or seven years with an approved savings institution.

At the end of the option period, the employee may purchase the shares at the agreed option price or withdraw the money, with accrued interest, tax-free. Any profit on the disposal of the shares is subject to capital gains tax, at 20 per cent, rather than to income tax.

"We believe that SAYE schemes are a highly effective way of further aligning the interests of employees and shareholders," said Mr Brian Goggin, chief executive of Bank of Ireland Corporate and Treasury.

Bank of Ireland will invest the funds lodged to the Waterford Crystal scheme as well as providing administration services for it.