A decision by the Minister for Finance on the proposal that TSB Bank and ACCBank be merged and floated on the stock market is imminent.

The boards of the two banks made the proposals to the Minister towards the end of January in the form of a joint memorandum of understanding on their future direction. A merger would result in a bank with 130 branches and 1,650 employees before any rationalisation or restructuring. Mr McCreevy is expected to signal broad agreement with the plan within a week or two.

Then the process of putting the proposals to the Government will begin. This will involve the production by the Department of Finance, as the sponsoring Department, of a memorandum on the plan. It will then be circulated to other Government Departments which will be given a couple of weeks to respond with their comments or observations on the plan.

The Department of Finance will then assess the responses and make any appropriate changes to the memorandum. Then the memorandum will be sent to the Government for a decision. The process will take a number of weeks and the issues which may arise include the terms of a share option plan for employees of the banks and the extent of rationalisation involved in operations where there is some overlap.

Both banks are committed to the merger and flotation. TSB chief executive Mr Harry Lorton said yesterday that the proposed merger and flotation was "the strategic direction which the trustees believe provides the best possible way forward for our customers and staff".

The TSB chairman, Dr Dermot Whelan, commented: "The merger and flotation proposal from ACCBank and TSB Bank is now with the Minister for Finance for his consideration. We are optimistic that we will have approval from the Minister for our proposals within the coming weeks. This will allow us to create a financially strong, competitive and nationwide bank with clearly defined strategies in its chosen markets - personal, agricultural and agribusiness, commercial and wholesale banking".

However, the banks want Mr McCreevy to agree to provide legislative protection from take-over for a period of five years after the merged entity comes to the market.

This would be similar to the legislative conditions currently in place for building societies which demutualise and float on the stock market. It is aimed at allowing the company a period to establish itself in a new environment.