The terms of an employee share option scheme (ESOP) will have to be agreed before tenders are issued for the sale of ICC Bank, MSF, the union representing workers at the state owned institution has warned.

MSF regional secretary Mr Brian Gallagher confirmed yesterday that the employees would be seeking 5 per cent - in recognition of the contribution they have already made to the bank's profitability - with a further 9.9 per cent to be bought at fair value.

On Monday, the Minister for Finance, Mr McCreevy announced that the Government had agreed to sell off ICC. It is expected that the bank will fetch in excess of £200 million.

The Minister said the sale would include conditions that guarantee the employment of the bank's 310 staff. He also made provision for staff to own up to 14.9 per cent of the bank.

Mr Gallagher said that it was hoped to have terms on the share option scheme, known as an ESOP, concluded before the Government appoints its advisers to handle the sale in three months.

He said MSF, which represents about 90 per cent of staff at ICC, would probably retain its own advisers to negotiate the ESOP. "We are not looking for it for free," he said.

In a statement, the chairman of the ICC Bank/MSF staff committee, Mr Bernard Daly welcomed the Minister for Finance's commitment to the conditions for the sale of ICC Bank. "However, it is important that the conditions of the contract of sale spell out in full the details of the guarantees the Minister has given, regarding the maintenance of the existing terms and conditions of employment, including pension entitlements and its ruling out of compulsory redundancies." It is understood that the employees were originally opposed to the disposal of the bank. However, following confirmation from Mr McCreevy that the sale of the bank would go ahead, representatives began discussions with the Department of Finance on the matter. These discussions concluded last Friday.

Mr Gallagher said the ESOP at ICC was different from the Telecom deal, because there had been no restrictive work practices or demarcation lines. Telecom workers got 5 per cent in return for changes in work practices. Mr Gallagher said ICC employees would be seeking 5 per cent in recognition of their contribution to the bank's financial performance in recent years.

He also said it was important that the ethos of the bank be retained and that was why the employees would be able to examine tender documents. ICC plays a very important role in the small and medium enterprises sector, he said, and this should continue.

It is expected that virtually every Irish financial institution will bid for ICC, including Bank of Ireland, AIB and Ulster Bank.

Meanwhile, the decision to sell the bank has been criticised by Labour's finance spokesman, Mr Derek McDowell. He said it was "nothing more than a bit of ideologically-driven expediency" and was nothing more than privatisation for the sake of privatisation.