Legislation to enable the £339 million sale of the TSB Bank to Irish Life & Permanent has passed its second stage in the Dail and now moves to the Finance Committee.

Speaking in the Dail yesterday, the Minister for Finance, Mr McCreevy, said his financial advisers had found the sale process was carried out in an open, transparent and fair manner by the bank's trustees and that Irish Life & Permanent's bid represented "full value" for the TSB.

An amendment proposed by Labour Party finance spokesman Mr Derek McDowell to establish a financial scheme to reward the loyalty of TSB depositors was defeated by 75 to 57 votes.

The Minister for Finance said the proceeds of the sale would be put into the Exchequer Central Fund which will benefit all citizens. Some TSB depositors believe they have an entitlement to some of the proceeds of the sale but Mr McCreevy said that the path he was following was based on advice from the Attorney General. The Bill includes a provision to allow for the establishment of an Employee Share Option Plan (ESOP) to give TSB's 1,200 employees a 15 per cent share of the sale. They will share £50.8 million, with more than 80 per cent entitled to £40,000 each, but will have to wait until 2003 to sell the first tranche of shares, which is capped at £10,000.