Michael Finucane
Question:17 Mr. Finucane asked the Minister for Finance the plans, if any, he has to proceed with the sale of ICC Bank; and if he will make a statement on the matter. [22522/99]
Other Questions. - ICC Bank Sale.
Willie Penrose
Question:26 Mr. Penrose asked the Minister for Finance the Government's proposals for the future of ICC Bank; the number of bids received for the bank; and if he will make a statement on the matter. [22711/99]
I propose to take Questions Nos. 17 and 26 together.
Deputies will be aware that the Government made a policy decision to dispose of the State's interest in ICC Bank. Arising from that, a tendering process for the sale was initiated in July. While up to ten banks expressed an initial interest in acquiring the bank, only three firm indications of interest were received. Subsequently, two of these banks withdrew from the sale process and only one final bid, submitted by Bank of Ireland, was received by the deadline of 19 October 1999. Last week I confirmed Bank of Ireland as the preferred bidder and it is now undertaking final due diligence on ICC Bank following which final negotiations will take place.
When this exercise has been completed I intend to bring my proposals on the matter to Government for a decision. In deciding on the future of ICC Bank, I will take into account the long-term interest of all the stakeholders – the company itself, the staff, the customers and suppliers, and the shareholders.
What steps has the Minister taken to ensure that, in circumstances where there is only one bidder, the State receives the full value of the company? When he talks about further negotiations taking place after the due diligence, is that simply negotiations about the transfer or will the price issue arise again?
Is the Minister concerned that an increasingly small number of players seem to be involved in banking in Ireland? If this was a private company being acquired by the Bank of Ireland, no doubt it would be referred to the Tánaiste's office to see if an undue portion of the market was being taken by one big player. Will there be a reference to the Tánaiste's office to examine what portion of the banking market Bank of Ireland will have subsequent to this takeover?
There are three separate questions. On the question raised regarding whether the full value will be received by the State, this was widely advertised and initially there were expressions from ten bidders. The next process was that they were given some information. After that, there were only three bidders. When it came to the final date, there was only one bidder. That was the process. What was going to happen was set out at the start. I had hoped there would be more than one bidder at this stage, but then the decision was made to give them further information and the last bidder, Bank of Ireland, must undertake further due diligence.
One of the Deputy's questions related to the small number of players on the Irish financial scene. I am sure the attraction of ICC Bank for a number of the bidders looking at it in the first instance would be its niche in the market in which it works and that will have been taken into account by all the bidders when they looked at this opportunity.
The Deputy's last question referred to the possibility in the final analysis of this being referred to the Competition Authority. When this final part is dealt with by the preferred bidder, Bank of Ireland, I will bring my final proposals to Government and make a decision at that stage on what I will then do, taking into account the interests of all the stakeholders in this operation.
The Minister was reported in the press last week as having said that he felt consolidation within the banking sector was in a sense an appropriate defence mechanism against the possibility of largescale takeover of the retail banking sector by foreign interests and by foreign owned banks. Does that reflect the Minister's view or does he take the view that we need as many players as possible to ensure competition?
Is the Minister committed to selling ICC Bank come what may, or could he envisage circum stances where he would recommend to Government that the sale does not proceed?
Yes, I was reported correctly last week in referring to aspects of the banking sector, and I referred to this matter when I addressed the institute of bankers on last Thursday night and previously in an interview which I gave to Business and Finance. I said I was undertaking a strategic review of the banking sector here because there are a number of issues which pertain which are unique to the Irish situation. The two main institutions are very large in an Irish context but in a European-wide sphere they are very small. As has happened in other countries, perhaps we will wake up in five or six years and find that the banks, which we refer to as the Irish banks, are no longer under Irish control in the sense that their headquarters and staff are not located here. Someone at that stage might say “How did that happen overnight? We should have done some thinking about it.”. I said in the interview and I repeated in my address to the institute of bankers that I do not have a fixed view as to how we should progress. I certainly want competition in the banking sector, but one must remember that Ireland is very small in European and world contexts. Those and other issues should be teased out at this stage and some thinking should be done, and that is why I am undertaking the strategic review. That is one aspect of the strategic review which should be faced up to at this stage.
Deputy McDowell's second question was: will I sell ICC Bank, come what may? I stated in reply to Deputy Noonan's question that when this process of final due diligence is undertaken by the preferred bidder and in the light of all the information then, I will make a recommendation to the Government, but it is correct to say and I have said so on numerous occasions that I do not see a long-term future for the State involvement in the banking sector, not only with ICC Bank but also with ACC Bank. I stated that previously in this House and outside, and it is still my view.
Has the Minister received any outside evaluation of ICC Bank or is he relying on his own view of its value or that of his Department ?
We put in train a number of procedures before we started out in this area. I have advisers, who advise me, but the sale price of anything, as the Deputy will be well aware, is what a person is willing to pay. The Deputy might think his house in Limerick is worth so much but he will never know until he puts it up for public auction. In this instance, I have put ICC Bank up for public auction. We initially had indications of ten bidders, it was reduced to three and now it is reduced to one. Therefore, the value of ICC Bank is what the market determines on foot of public tender-auction.
My advisers were put in place some time ago and I have taken their views into account.
Who are they?
ABN AMRO and others. I can give the Deputy details of the other people, but ABN AMRO are the primary people in this regard. That was announced a long time ago.
I take all of these things into account and, after this phase of due diligence, I will make a recommendation to the Government, having taken everything on board.