Mike Aynsley: Anglo head will be overseeing a restructuring

IRISH Nationwide has agreed to sit down with a third-party mediator in an attempt to ease the fears of the bank officials' union over expected job cuts at the building society.

Irish Nationwide's €4bn deposit book is being added to that of Anglo Irish Bank and moved to another institution to improve liquidity in the banking system.

The remaining loan books of the two lenders will be run down over time, leading to fears that hundreds of Irish Nationwide jobs are at risk.

However, the building society has agreed to discuss the impact on its workforce with an independent arbitrator and the Irish Bank Officials Association (IBOA).

Merging the deposits books of the two institutions was a requirement of the €85bn International Monetary Fund and European Union rescue package. The plan for the future of the two lenders is due to be submitted tomorrow.

There is concern among the Irish banks that EU employment laws could force them to take on unwanted staff and branches in the event of consolidation. Under rules governing takeovers, employees and their terms and conditions must transfer from the old business when a new entity is created. According to market sources, this could delay decisions on restructuring of Anglo, which is headed by Mike Aynsley, and Irish Nationwide as the other banks wait for downsizing before making moves to acquire the healthy parts of their balance sheets. One banking source said the EU rules would not apply to transfers of deposit books or asset portfolios.

It is feared that Irish Nationwide, with 50 branches across the country, will bear the brunt of the cuts, with speculation that Anglo will take the lead role in the merged entity.

Larry Broderick, general secretary of the IBOA, said he wanted all political parties to spell out their plans for the restructuring of the banking industry before any decisions were taken.