Am I to take it this Bill deals with the National Bank in its entirety? When I say that, I emphasise that one-third of the National Bank is in the United Kingdom and two-thirds in this country. Is this legislation concerned with the overseas branches or only with the Irish branches? It seems to me from the shareholder's point of view—I am not a shareholder, as I indicated on the Second Stage—they are entitled to have a say in the decision as to whether the overseas part is being transferred to the Bank of Scotland, or is that a fait accompli, or will it take place after the directors meet in London? If that is so, I can see nothing whatsoever in this Bill, supposed to be an eneve abling measure, to enable the directors of the National Bank to do what they wish to do—become the National Bank of Ireland here and the National Bank of Scotland in the UK. How can we pass legislation unless we deal with both sides? We are the public representatives of this country whose duty it is to try to get as much information as possible here in the Irish Parliament relevant to this transaction. I fully agree with Deputy Dillon that we have been given no information at all. The only information I can find is in the statement of the Chairman of the National Bank which says it is no longer desirable, owing to economic circumstances, that the two banks should be amalgamated, that the National Bank should be an amalgamated entity operating two banks. I am convinced of that from the point of view of the economic situation. Perhaps the Minister would clarify those points.
Committee on Finance. - National Bank Transfer Bill, 1966: Committee Stage.
This legislation can apply only to the area of jurisdiction of this Parliament—twenty-six counties of Ireland. It is necessary to legislate in this form because a new company is being set up, the National Bank of Ireland, within the Twenty-six Counties, to replace the National Bank as it originally was. The legislation is necessary in order to give legal force or to enable legality to be given to the transfer of securities, overdrafts and things like that. Otherwise, it would be necessary for the National Bank of Ireland to negotiate separate agreements with all customers who have securities lodged in the bank or who are overdrawn. As I have said, the purpose of this legislation is to give legal permission to effect these transfers. It does not apply in any way to the operations of the National Bank in the Six Counties or the UK.
It does in the Six Counties. It says so in the Bill.
It does not. The National Bank in the UK will continue as it originally was. As I understand it, the National Bank will continue as the legal entity it always has been. There may be a change in ownership as happens always in the buying and selling of shares. For that reason, no legislation is necessary in the UK. The legislation here is necessary in order to facilitate the transfer of securities and overdrafts and things like that. Our legislation deals only with the operations of the National Bank within the Twenty-Six Counties.
Apparently in the UK it is to retain the same name but it is to become an auxiliary of another bank. Surely the Minister bringing in the Bill must have the information as to whether that is already a fait accompli in the UK or is enabling legislation being brought in on the other side—is the National Bank in the UK a subsidiary of another bank?
It is not necessary there because there is no such change in Britain.
If it is not necessary to change the name of the National Bank in the UK, even though it is to become a subsidiary, the residential two-thirds part here must have its name changed. Why can it not still remain the National Bank as it has been for more than 100 years? Why call it something else?
If the shareholders so decide, a new company will be formed.
(South Tipperary): Why must it become a new legal entity? Why not leave it here as it is in England?
That is a matter for the people purchasing the shares and the shareholders selling them.
(South Tipperary): Apparently the difficulty here is that the shareholders believe they are not getting full value for their shares. There is a notion that some of these shares are undervalued. The Minister says the information in the Press today, particularly the Irish Times, covers that. I have read it and all I can gather from it is that Sir Henry Benson of Cooper Brothers made these share valuations. Apparently this information was made available to the company of Cooper Brothers, but this is an accountancy firm not a valuation firm. Presumably that accountancy firm merely made its valuation of the value of the shares on a valuation produced by some other valuation firm? We do not know who that valuation firm was. The kernel of the dispute and the reason why the shareholders association was formed is that they believe the premises of the National Bank, as such, have been under-estimated. I would like the Minister to give me information as to how this valuation was arrived at, this valuation given to this firm of accountants, and who were the valuation firm.
I hope the House will realise that I do not have to justify this acquisition at all. What I am doing is recommending to the House the passing of the legislation necessary to effect this acquisition, if the shareholders agree.
(South Tipperary): Why not wait for the shareholders' meeting?
Cooper Brothers are an internationally-known firm of accountants. I am surprised at Deputy Hogan's suggestion that a firm of valuers could come in and suggest what is the value of a 10/- share——
(South Tipperary): And the premises?
I understand there has been an up-to-date valuation of the premises as well.
(South Tipperary): By whom?
I do not know. Cooper Brothers have certified that this valuation has taken place. They have certified also that the offer of 56/6d for a 10/- share is, to use their words, "fair and reasonable". As far as I am concerned, I have been presented with a certificate of an internationally-known firm of accountants. I have a request from the Bank of Ireland, the integrity of whose Governor and members nobody questions. Similarly, the integrity of the directors of the National Bank here is not in question. These people coming together say to me that legislation is necessary in order to effect this acquisition by the Bank of Ireland of the National Bank. I say, having looked at the information they supplied me with, I agree it is in the interests of the country that I provide the enabling legislation, provided the shareholders agree. The enabling legislation is necessary, as I said, because of an impending change in British company law and British taxation provisions before the end of March. It is my purpose in this to ensure that, as far as I am concerned, having examined it and having regard to the knowledge made available to me, it is in the best interests of this country that this transfer be effected, if the shareholders so agree. That is what I am doing.
(South Tipperary): The Minister says this is enabling legislation necessary for him to introduce. Why introduce it at this stage? After all, a vote will be taken in London on, I think, Thursday. Surely he could wait until after the shareholders' meeting and allow them to approach this matter with an open mind and say what they will do with their own property? Why, so to speak, put the horse before the cart? It looks to me as a layman that this enabling legislation might be meant to influence the shareholders. We know that, if we are able to get £300 tax out of the transaction ultimately, it will be a very useful thing for us. But, at the same time, I fail to understand why the Minister rushes the enabling legislation through the House before the people who own the property are allowed in an objective fashion to make up their minds on a commercial basis one way or the other.
The agreement is expressed to take effect only if enabling legislation has been passed. If I could use a very rough analogy, I do not know whether Deputy Hogan has children or not, but if he had a son and the son said to him: "I am very interested in a girl in a neighbouring town. If I woo her and she accepts me will I get your consent?" Deputy Hogan says: "By all means; you have my consent, if the lady accepts you and you are agreeable to marry her."
But he would not have to change his name.
It seems the Minister is recommending this on behalf of the Government. The National Bank has, I think, 39 branches in all the big centres in England. I do not know exactly how many branches they have in Ireland, but the number is in the neighbourhood of 300. It seems to me only natural, if the Minister is supporting a Bill on behalf of the Government, that in spite of the integrity of the directors referred to and of the firm of accountants referred to, he should, in a business deal of this kind concerning literally thousands of people, come in here with the requisite information as to the valuation. Deputy Hogan has questioned the valuation of the premises, as to whether it is sufficient or not. We had the Second Stage of the Bill a week ago. I think I was the only doubting Thomas then; everybody else received it with enthusiasm. There has been a certain amount of public interest aroused in the matter, particularly among shareholders. One would have imagined the Minister would have had the information as to the valuation. There are premises of the National Bank in College Green on which a considerable sum of money has been spent. These premises are right in the centre of the city and must be very valuable. The bank have numerous other premises. They have premises in the heart of London, in Trafalgar Square. If those premises were bought for £1 million, I imagine they would be cheap by ordinary standards of valuation today.
We have no information at all. We do not know if this is an up-to-date valuation or if this is the valuation of the premises 25, or even 40 years, ago. This House is one of the places where we can dissect such matters, because in a free Parliament, we are allowed to express our opinions. It is up to the Minister to give us the necessary information. If he cannot do so at this stage, I presume the Report Stage will not be taken until a later date. There does not seem to be any great hurry about the Bill. Perhaps the Minister would have the information later as to a breakdown of the valuation of premises at £1,800,000? If I could buy the National Bank premises in England and Ireland for that amount, I think I would have a pretty useful profit when I came to sell them again. I would be able to keep a few of the banks out of the profit.
I move amendment No. 1, in the name of Deputy T. F. O'Higgins:
In page 2, line 41, before "and" to insert "or any obligation entered into by the transferor in relation to a customer".
The purpose of this amendment is to ensure that any obligation being entered into by the transferor in relation to a customer will be adequately safeguarded. It may be that the section as drafted covers whatever obligations the National Bank Limited, described in the section as the transferor, have undertaken and is adequate. In order to make doubly sure, however, this amendment is being put down so as to safeguard whatever obligations the transferor may have entered into with the customers.
I believe the section as it stands takes adequate account of the obligations Deputy O'Higgins seeks to cover in his amendment. However, I have no objection to including in the section the words sought in the amendment. If it does not strengthen it, it at least sets it out fairly clearly.
Amendment agreed too.
This section, as I understand it, deals with the property of the depositors of the National Bank. Any person who has negotiated a loan for accommodation with the National Bank, as at present constituted, may have deposited with that bank securities worth £10 or £1,000 or £100,000. He may have deposited with them the mortgage deeds of his business establishment or of his house. The Minister will recall, in his legal experience, provisions of many such mortgages and the right, in certain circumstances, to bring in a receiver.
The man who mortgages his property to his bank gives great hostages to fortune. We propose here, by legislation, to deal with the property of people, that is, borrowers from the National Bank. We are not the parties to this transaction at all. It is not at all inconceivable that a borrower in this country made up his mind, for his own good reasons—whatever they were—in relation to a substantial block of securities or real estate, that he would prefer to give that charge to the board of directors of the bank in London. Is there any precedent in the legislation of this country or is it consistent with our Constitution, without any regard at all to whether you agree, to give a charge on your property or investments to the National Bank of Ireland, which hitherto had been the National Bank Limited? We are now, by law, vesting in a new entity, the National Bank of Ireland, a lien on your property which you never gave and which you never could have given because it did not exist when you made the arrangement.
I recently said to a banker in this city that of the many odd provisions of this Bill, I thought this provision the strangest of all. He said: "The Bill does not do that; it could not do it." I said: "It does do it, as far as I understand it." He replied: "Oh no, it provides for the transfer of shares in the bank but there could not be any question of transfer of security. That would be a matter for the bank to re-negotiate with its new customers, inconvenient as that may be."
If I understand section 3 correctly, we are proposing to give legislative sanction to a transaction which, in my submission to the House, is unconstitutional. We have no more power to give to the National Bank of Ireland, which is not now in existence, a charge on a man's property which is at present mortgaged to the National Bank than we have power to jump over the moon. It may be that section 3 does not mean this. If it does not, I should like to be reassured to that effect by the Minister. However, if it does mean it, I should like to hear from him how such a procedure can be justified.
If what is proposed in the section is not carried out, would it mean that the bank would have to call in all money outstanding and to arrange for the transfer and to have the new bank reissue the loans? Is that the reason for the section, as introduced?
That, in effect, is the position. The section was designed to avoid the necessity for doing this. I do not mind admitting that what has been expressed by Deputy Dillon occurred to me, namely, whether a security lodged with A could be transferred to B, without the consent of the person who lodged the security, let it be a mortgage or any other form of collateral. This question was examined. I have been assured that, since there will not be any worsening of the rights of customers or disimprovement in the securities, there is nothing unconstitutional about it.
I felt it necessary to insert this section in order to avoid the necessity to do what Deputy Tully said might otherwise be necessary. Being an enabling Bill any person who feels his security has in any way been jeopardised or minimised can change, if he so wishes. I do not think it would be fair for me to expect any person to be put to the expense of challenging the constitutionality of this section. Having regard to the questions I raised, to the examination made of it and the results I got of the examination, I am satisfied that nobody who has a security lodged with the National Bank will be in any worse position. There will be no worsening whatever of his position by reason of the transfer of that security to the National Bank of Ireland. On the contrary, as I hope, the security may well be enhanced.
I am challenging the statement that the security would not in any way be jeopardised. We are setting a precedent here. I can understand the Minister's position in saying, in effect: "This Bill is contingent on the decision taken by the shareholders of these banks on Thursday next and it is only in the event of their deciding, by a 75 per cent majority, to adopt this scheme that I shall make the appropriate order. I shall adopt that procedure only on account of the pending change in the law of Great Britain which requires expedition."
How can we interfere with the property of someone who is not a party to the proceedings at all? That is what I am saying. If a transaction took place which did not involve legislation of any kind, and Lloyds Bank were taken over by Barclays Bank and an indignant depositor came in and said: "I did not choose to pledge my securities with Barclays Bank. I pledged my securities to Lloyds Bank and now Barclays are taking it over", I can understand Barclays Bank saying: "If you are not prepared to give us the charge which Lloyds hold, we must ask you to liquidate your overdraft forthwith and if you do not liquidate your overdraft forthwith, we will have to set machinery in operation to recover our debts." On the other hand, I can imagine Barclays Bank saying: "We have not the slightest desire to do that. We were most anxious to retain your custom when we bought Lloyds Bank and if you transfer your security to us, we will be most happy to give you accommodation the same as or better than Lloyds Bank gave you."
But the Legislature of Ireland is required by the circumstances to intervene and we appear, as far as I can judge, under section 3, to deal with property of persons who are not parties to the agreement which our legislation is designed to legalise. I have held the rigid view that in this context we could easily do it in regard to other forms, or claim the right to do it in regard to other forms.
The Minister is very careful to say that every provision in this Bill which relates to the property of the National Bank or the Bank of Ireland or the new entity which is coming into existence, the National Bank of Ireland or the Scotch Bank is contingent on the shareholders agreeing to the proposals set out in the Bill before us and if they do not agree he will not agree to this legislation operating at all. There is no such reservation regarding the securities mentioned in section 3. That strikes me as odd. I can assure the Minister that I discussed this recently with an eminent banker in this city and he emphatically denied the possibility that such a provision could exist in the Bill.
Is the Minister going to make any comment?
I have covered it adequately already in the comment I have made, that I quite realise that the customers of the National Bank who are enjoying overdrafts from the National Bank will have deposited some securities for these overdrafts. Therefore, they will have pledged to some extent the custody of these securities, whether they are mortgage deeds or other realisable assets, to the National Bank only. In the analogy presented by Deputy Dillon, if Barclays Bank took over Lloyds, that would be a transfer of ownership, perhaps, by purchase of shares. It would be open to Barclays Bank, having purchased Lloyds, to say to Lloyds customers: "You can withdraw your securities from us but we would prefer you to continue". I take it that the same option would apply in the case of a person who has securities lodged now for the purpose of an overdraft from the National Bank to take these securities from the new National Bank and to pay whatever obligation he has to the original National Bank to the new National Bank of Ireland.
To pay off his overdraft, in other words?
This Bill automatically does it.
It does not.
It purports to do it.
No. The purpose is to transfer securities from the National Bank to the National Bank of Ireland.
If it was that, that is not my difficulty. These are not the securities of the National Bank. These are the securities of the debtors of the National Bank.
The Minister has a much better answer in his brief, if he would look at it.
These are the securities of the borrowers at present on deposit in the National Bank that we are now transferring to the National Bank of Ireland. How can we be parties to that when the borrowers are not parties?
I am certain that the Minister's brief has the answer.
I will read the brief for Deputy Sweetman's information.
The Minister for Finance is a barrister in his pre-ministerial capacity.
That was a long time ago.
And in his immediate post-ministerial capacity.
Not necessarily.
All right. If he is not going back to the Bar in the immediate future, I wish him luck in whatever capacity he is going back because he is going out of there. That is clear. But, in his pre-ministerial capacity, he was aware that if Deputy Dillon owes the Minister for Finance money and the Minister for Finance chooses to assign to Deputy Millar up there his security, not merely will Deputy Dillon have to pay the Minister for Finance the money but he will also have to pay the cost of assigning these securities to Deputy Millar. This is to avoid (a) stamp duty to the Revenue Commissioners and (b) solicitors' charges and it is a damn good job that both are done and I am sorry the Minister did not make that quite clear from the beginning because I am sure it is in his brief.
Deputy Sweetman has practical experience in matters of this kind and has not very much sympathy with theoretical constitutional reservations.
None.
He is a very practical man. I am well aware that this is designed as a short cut.
Cost.
This is designed as a short cut. It is designed, I have no doubt, to facilitate the customers of the respective banks. Sometimes, in a desire to provide practical accommodation of this kind, you set a precedent which in itself is undesirable or which may be unconstitutional. I know of no legislation in this House that has operated to transfer the property of a citizen of this State to anybody other than the transferee chosen by the owner of the property.
Oh, yes.
There is an analogy in the case stated by Deputy Sweetman and the case I have suggested to the Minister, that if the Midland Bank, at the jurisdiction of the British Government buys Lloyds Bank, Lloyds are entitled to transfer all securities to the Midland Bank, and if the Midland Bank says to a customer of Lloyds Bank, "If you do not want to deal with us, liquidate your overdraft and transfer your securities," no legislation is required. But, we are legislating — legislating — to the effect that on the Minister making his order, automatically these securities will vest in an entirely new body which is being called into existence by this Bill.
I fully appreciate that Deputy Sweetman is a practical man but he will observe that the Minister for Finance himself had some difficulty about this and took counsel. He assures us he is advised that this thing could properly be done. I can assure the Minister that I was assured by an eminent banker in this city that this thing could not conceivably be done, and when I said to him, "But it is in the Bill", he denied it energetically and I asked him if he had read the Bill and he said he had not.
That is the answer.
You should be over here.
I should and will be and I will read the brief.
The fact remains that practical considerations of this kind are fully understandable but they do not alter the fact that we are doing something that I do not believe has been done by the Legislature here before and I doubt, practical as this procedure may be, whether it desirable to do it now. If we want to waive the costs—stamp fees, et cetera, et cetera—and if this is the sole object of this section, I see no reason why we should make provision that transfers of securities for the purpose set out in this section by customers of the bank concerned should be made free of stamp duty. If this is done, the same purpose is achieved, but I admit that the National Bank of Ireland would be put to considerable additional trouble in re-negotiating with each individual customer the agreement under which he proposes to transfer his overdraft from the National Bank. If the National Bank wants to put this scheme through, this is not unreasonable trouble, I think, to impose upon them and I suggest to the Minister that he might reflect on this again because, if his sole object is to save the bank and the customers expense, he should make a special provision exempting the transactions in pursuit of legislation from stamp duty if completed within six months, or whatever period he chooses to name, of the date on which he brings the legislation into effect.
We have a separate section dealing with stamp duty. While I was conscious of the facility for assigning debts and securities, etc., Deputy Sweetman observed that I was immersed in the constitutionality of the argument as presented by Deputy Dillon. I was trying to answer him on that basis, but I think Deputy Sweetman has to a considerable extent answered the points raised by Deputy Dillon and, having regard to the advice on the constitutional issues, I am satisfied that this section is constitutional and will have the effect it is proposed it should have—in other words, to transfer securities from the former National Bank to the new legal entity, the National Bank of Ireland.
Would the alternative not cause both the bank and the borrower a tremendous amount of trouble?
That is the case. It would be a question of re-negotiating each separate contract.
Without even re-negotiating, if the creditor transfers the debtor has to pay the costs.
Could I have a little clarification? My mind is not attuned to the law like Deputy Sweetman's, Deputy Dillon's, and the Minister's. If I have an overdraft of £5,000 and, as against that, I lodge £6,000 in Government securities, hoping they will live up to the sum they are supposed to represent, what is the position? According to this section it is a transfer of a contract with the National Bank to the National Bank of Ireland. Is that what the section purports to do and is that legal? Is the Minister absolutely satisfied that, if we give the Minister this section, we are giving him something absolutely legal? I am afraid I do not understand Deputy Sweetman's argument at all. It seems to me that he was suggesting there should be a separate contract with the bank concerned and that would mean that the unfortunate person, besides having an overdraft, would have to pay stamp duty as well, and the legal fees.
If Deputy Esmonde owed me £5,000 and if he gave me a family heirloom——
I have none left. They were all burned.
——as security, I can sell that debt and hand over the family heirloom to Deputy Sweetman for, say, £4,000 and Deputy Esmonde is then indebted to Deputy Sweetman for the full £5,000, if Deputy Sweetman wants to extract that from him. That is a simple answer to Deputy Esmonde.
(South Tipperary): Is the Minister taking power in this section to transfer customers' overdrafts or debts, which would affect the bank's credits or the bank's assets, from the National Bank to this National Bank of Ireland and is he also taking power to transfer deposits——
No.
(South Tipperary): ——which, in effect, are bank debts?
Not deposits.
(South Tipperary): Is he taking power to transfer these also?
The deposits are bought. These are the assets. These are the debts, of course.
The Minister has read even less of his brief than I thought.
Put the question again.
(South Tipperary): The customer's deposit is the bank's debt, is it not?
We have, I think, passed from that section.
(South Tipperary): And the customer's overdraft is the bank's credit or asset.
What are we dealing with now?
(South Tipperary): Section 3 does not deal with customer's deposits then.
The customer's deposit is a security. What else is it?
(South Tipperary): Section 3 deals, I think, with collaterals.
Yes. It deals with the transfer of securities.
Has the Minister got any estimate of the amount of securities involved?
Section 3 deals with transfers from the National Bank to the National Bank of Ireland, and it is carried on in the State. That is overdrafts and deposits.
No. This section actually covers transfer from the National Bank of Ireland of the collaterals deposited with the National Bank here.
Have we got any estimate of the amount of the collaterals involved?
While the Minister is collecting that information for Deputy Sweetman, I want to put it to him that, if you chose to give a mortgage to the Board of the National Bank, heretofore a company registered in London, and you are not consulted, no preliminary demand is made upon you, has Oireachtas Éireann the power by statute—the bank may have it—to transfer that mortgage from one mortgagee to another? I confess I have my doubts. The bank has it, but has Oireachtas Éireann got it?
It is transferring it subject to the equity on redemption.
Whatever it is transferring, has this Oireachtas the power to transfer the property—that is to say, of a person who is not a party to this transaction at all — from one legal person to another legal person? I am certainly not satisfied that he has and I remember the Minister reassuring us that he would not contemplate bringing this piece of legislation into effect at all unless and until the owners —that is the shareholders—had themselves beforehand adopted the provisions of this Bill. Then, and only then, would he consider bringing in legislation and I find it difficult to reconcile that with being asked to adopt section 3 dealing with the property of people who have not been consulted at all. I want to go on record as expressing the gravest concern and as saying deliberately that the procedure here envisaged is a precedent from which I most emphatically dissent.
There does appear to be in this rather intricate piece of legislation a simple solution. While there seems to be a doubt in Deputy Dillon's mind, particularly about the right of the Oireachtas to legislate for the transfer, it is fairly obvious that unless something is done to bring about this situation, the people who have borrowed money from the bank and who have lodged collateral are going to be put to tremendous trouble and expense——
Not necessarily expense.
They have to pay the transfer stamp duty and unless there is some provision made the stamp duty will be pretty substantial. I believe the way which is suggested by the Bill is the easiest way. Perhaps it is not the best way to do it legally, but if the Minister has been assured by his legal advisers that it is possible legally to do what is suggested in the section, it should be done in this way, thereby saving a lot of trouble. I am not so much worried about the cost or the trouble to the bank but I am rather perturbed about the tremendous amount of trouble and, possibly, expense which could fall on the borrower. Goodness knows those who have overdrafts have troubles enough on their shoulders without having extra ones piled on as a result of the failure to provide for them in this Bill.
Would the Minister for Finance tell the House when the first draft of this Bill saw the light of day?
I cannot tell the Deputy when exactly it was introduced.
Was it never envisaged before the present occasion?
No, not to my knowledge. Certainly not in my time. With regard to Deputy Dillon's worry about there being a precedent, it is possible—and I am sure he will remember it better than I do—there was such a precedent in the transfer of the GNR to CIE. There were obviously some securities for debts in connection with the transfer from the GNR to CIE. I am only throwing that out.
I remember this House being rent in dissension in regard to that matter.
I think it was Deputy Cosgrave initiated that.
What?
The transfer of the GNR to CIE.
I remember, when that railway was being transferred to CIE, the passionate indignation that swept this House when the first mortgage debenture holders received, I think, only £80 for every £100 of the debenture. I remember it being argued strongly here in this House that if the debenture holders went in and took over the railway company all they would have is a burden around their necks. However, to pay 80 per cent on a first mortgage was fantastic. As was said at the time, it may be true to say that if the mortgagers go in and take over the railway they take over not an asset but a liability, but if you elect to buy them out you must abide by the terms of the mortgagers, that is, they are entitled to £100 of every £100 they have invested before anybody else gets anything. Many of us at the time took the view that it was a very dangerous precedent to establish. What I am suggesting is that the transfer here envisaged may represent a practical solution to a difficult problem, but it sets a precedent which I think is highly dangerous.
That was 80 per cent.
80 per cent of the first mortgage.
That was a rotten precedent introduced by Deputy Lemass, as well as I remember, when he was Minister for Industry and Commerce, and I think the general election was fought on that.
There was overlapping of responsibility between Deputy Lemass and Deputy Liam Cosgrave. I forget which overlapped which.
1944 is a long way back, but this is a different cup of tea. I am quite certain that the Minister has it written in his brief that the stamp duty will be 6d. per cent on all the securities involved.
It would be in a later section.
I am sure that 6d per cent is written into the Minister's brief. Equally, I am sure it is written in the brief that the mortgagee would be responsible for the cost of the transfer and for the registration of fees, which could amount to about £30 a time. If that is not in the Minister's brief, briefs have gone down since my day. Has the Minister got the figure for the amount of the securities because we can work out what 6d per cent on the amount was?
I am told it would be in the region of £50 million.
How much of that is secured and how much unsecured? It would not be £50 million in securities, as well as I remember.
I could not make that out quickly.
Unsecured, the debt would not carry the same stamp duty.
I have not got that information.
Surely the Minister asked what the alternative was before he brought in that section?
Could I ask the Minister who asked him to bring in this Bill?
To give a straight answer, the Bank of Ireland and the National Bank.
Could further ask the Minister was he not fully briefed by somebody when he was being asked to bring in a Bill such as this that was likely to be contentious or in relation to which he was likely to be asked for a good deal of information?
I was as fully briefed as I thought was necessary to bring in the Bill which, as I have said, is an enabling Bill.
If people ask a Minister to bring in a Bill, one would think they would give him information on the subject matter in all its facets. He seems to be very badly informed. It is no use saying the National Bank documents give us any information because they do not.
Would the Minister say if there is any other way in which the transfers can take place? If this section is not included in the Bill there must be a period when the National Bank has gone out of existence and the new organisation is just starting. The collateral is held by the National Bank. The money is held by the people who own the overdrafts, but the new organisation, the National Bank of Ireland, holds no collateral legally for the money which has been advanced. Therefore, if we do not do something about this, we are legally setting up a situation where the people who have the overdraft can say: "We have no contract with the new organisation." The other organisation has gone out of existence and, therefore, they can claim back their collateral and absolute chaos would result. Is there any way in which the contract can be drawn up, other than this way, which would guarantee a continuation of the right of the bank to hold the collateral and of the borrowers to hold the money which they have drawn? Could the Minister say is there anyway in which it can be done?
At a given point in time, no.
Otherwise, there would have to be an individual transfer in each case.
There cannot be because they are two different organisations.
We are bringing into existence a new body called the National Bank of Ireland. The position would be, on foot of the agreement presumably, that the National Bank which is in existence, would undertake to the National Bank of Ireland: "We will handle no customers now and therefore we will say to everyone of our customers in Ireland: either clear up your overdraft and we will give you back your securities or notify us to transfer your account and securities lodged therein to the National Bank of Ireland."
I quite agree that would be a formidable undertaking but do not forget that when they wanted the takeover to be approved, they sent out that document with a form of acceptance to every single shareholder of the National Bank. Presumably a similar document has gone to the governor and Company of the Bank of Ireland and presumably to every shareholder of the National Commercial Bank. All these are parties to the transaction. Does it not seem a bit odd that Oireachtas Éireann should step into the arena without reference at all to the customers of the bank? We are going to shift them over, assets and liabilities, nolens volens to the National Bank of Ireland.
I agree with Deputy Sweetman that this facilities the procedure but there are many easy ways of doing things that, in my opinion, we have to pay too high a price for. Many of our fundamental liberties survive by virtue of the fact that the people who try to take them away from us know that if somebody appeals to the court, the court will interpose itself between us and the Executive and forbid it. Many people of a practical turn of mind will say that only a crank will do that but cranks have as much right to survive as anybody and, vexatious as a crank may be, the Minister should not force us into the position of jeopardising fundamental rights because what we do today to a cranky borrower of the National Bank, we may do to a trade union the following morning or to an employers' organisation the day after.
Then we are reminded that when we were only dealing with the borrowers or the National Bank in section 3, we passed that without comment. I want to be recorded as commenting most adversely on this procedure and as saying that whatever problem or whatever annoyance there is it cannot be very much trouble for each of these three participating banks to circulate this document I have in my hand to every shareholder they have, and I do not think it unreasonable for us to say: "If you want facilities from Oireachtas Éireann to complete this transaction, you will have to proceed with very strict regard for the rights of those who have no one to speak for them in Oireachtas Éireann except people who interest themselves in abstract ideas."
In the troubled world in which we live, I see too many people deprived of fundamental rights because others want to take short cuts. I attach great importance to fundamental rights and the moment we begin to abridge them in the name of efficiency, we put our foot on a slippery slope, at the bottom of which many serious pitfalls may lie.
With regard to Deputy Dillon's remarks about fundamental rights being taken away and action being taken, perhaps, against a trade union, action was taken against trade unions. As I mentioned last night, in another place, two sides of the House joined to take that action and we were the only people objecting. Luckily for everybody concerned, it did not have to be put into operation.
I am not a lawyer and therefore I may not be able to grasp the fine points of this as others here may do, but from a layman's point of view, all I am interested in is this: if, say, there is a business man who has a working overdraft of £25,000, is there not a danger that unless this section is passed, the day may come when he is told that the National Bank no longer exists and that therefore he has no right to an overdraft there, that the National Bank of Ireland have not made any overdraft arrangements with him, that the only way this thing can be cleared up is for the National Bank to recall the £25,000, liquidate the debt, as Deputy Dillon says, and have the whole matter re-negotiated on different terms? That may result in an industry closing down and people going out of employment and other undesirable consequences.
If this simply means what I believe it means, that it is necessary to do it in this way for the purpose of ensuring continuity, I think we should not make such a song and dance about it. I do not think there is any suggestion of any attempt being made by either of the banks, the one going out or the one coming in, to take advantage of the borrower. If there were, we might all consider it in a different way. I agree with Deputy Dillon that the bank should have been able—I am quite sure they are able —to send the necessary documents to all their shareholders to ensure that the whole matter is covered, but I understand that the Minister and the Government believe that this measure is necessary in order to ensure there will be no hitch. If so, I am prepared to support the section. It has not been proved to me so far that the section is not necessary. That is the position as I see it.
The layman's approach is often much more valuable than the professional or technical approach. Deputy Tully has put his finger on it, in that if a customer of the National Bank, having securities lodged against an overdraft facility, objects to having these securities lodged with the National Bank of Ireland when it comes into existence, he has every right to say to the National Bank of Ireland: "Give me back my securities and here is your £25,000." That in effect is what happens, if he wants to do that. But in order to avoid the National Bank of Ireland having to carry out new negotiations in respect of the value of the securities as against the value of the accommodation that has been extended, this section will facilitate both the new bank and the customers in making this transfer possible, without the necessity of going through all these individual negotiations. I might say that there are six banks of the National Bank in the six counties of Northern Ireland. There is no provision being made in respect of the people who have securities lodged there in respect of which they have overdrawn accounts. In these six banks separate agreements will have to be made. There are 130 banks in this part of the country, and but for the assistance of this legislation, there would have to be a separate and new agreement negotiated between each of the various customers and every one of these 300 branches.
As has been pointed out, I can assign a debt as much as I can assign my own property. A debt is as much my property as the tangible asset which I hold. The debts due to the National Bank can be assigned to the National Bank of Ireland. There is no question of offending against the Constitution there. If somebody feels his security is in any way prejudiced or in any way jeopardised by reason of its transfer from the National Bank to the National Bank of Ireland, he has every right to withdraw it on payment of whatever accommodation was made available to him. It is an enabling section to obviate the necessity of the National Bank of Ireland going through the negotiations with each customer in the 26 Counties. I think Deputy Tully's layman approach is the proper one.
There is a much more fundamental reason than that which the Minister has given. The Minister's explanation may be, if you like, the layman's approach of Deputy Tully, which I do not criticise at all, but the fundamental reason for this section is quite a simple one. Again, I am sure it is in the brief. This does not do anything that the bank cannot do of their own accord. The National Bank can transfer all these securities to the National Bank of Ireland without this section. Therefore, we are not in this section giving the bank or anybody else any rights that they have not got on their own. We are in this section avoiding certain expense that there may be on the customers and the bank. If the Minister made his case on that basis, as is the law, and as I am sure, is in his brief, we would be on much stronger——
We have not come to it yet.
This section——
Section 7.
Section 3 relates to securities. The Minister said that £50 million was the amount involved—sixpence per cent or £12,500. I am not good at mathematics but I am sure that the Minister or some of his advisers have worked out what sixpence per cent on £50 million is. The plain fact of the matter is that the Minister has not put it on record, and therefore somebody has to put it on record for him, that the National Bank have at present in law the right to transfer these securities and the debts that are due to them to the National Bank of Ireland, whether or not the customers of the National Bank wish it. If the National Bank were to transfer to the National Bank of Ireland the debts due to the National Bank, and the securities that are due to the National Bank, then those customers in the National Bank will have to pay (a) stamp duty and (b) the costs that are involved in that transfer.
With all respect to other people, there was a great argument against section 2. Section 2 might very well be described as being unconstitutional, but section 3 does not give anybody any rights they have not got already. I am sorry I have to make a case for the Minister which the Minister has not made, but all section 3 does is by an Act to do what the National Bank has the power to do, not at its own expense but at the expense of its customers. Because it is going to save the customers that money and cost the Minister, if you like, £12,500, I am glad he is doing it.
If I may acknowledge that assistance from Deputy Sweetman, may I also point out that section 7 specifically provides for exemption from stamp duty——
No.
It does.
But section 3 provides the method of doing it.
Section 7 provides that:
(1) Section 12 of the Finance Act, 1895, shall not apply to the vesting in the transferee of any property——
Otherwise, there should be stamp duty on this.
——of the transferor by virtue of this Act.
(2) Stamp duty shall not be charged and shall be deemed never to have been chargeable on the Transfer Agreement.
(3) Stamp duty shall not be charged on any instrument executed in order to supplement the transfers effected or deemed to be effected by sections 2 and 3 of this Act.
Otherwise, when this was put in the Land Registry, the Land Registry would say: "There is £12,500 on this before you register it." The Minister has much better advice available to him than mine.
I wish to be on record as dissenting from the principle of this section and section 2 which may save people a good deal of trouble, but there are rights which should be conscientiously preserved.
(South Tipperary): I asked the Minister a question to which I did not hear a reply. I asked him why a new legal entity, as he calls it, is being created here and not in Great Britain. Neither did he give me a favourable reply to my question about why legislation was being introduced beforehand. I will ask him a third question, that is, why was a simple merger not possible, without having to come to the House at all? At present there are plenty of international mergers going on; there are insurance companies in Great Britain forming mergers with insurance companies on the Continent with a view to entering the Common Market. The Commercial Insurance Company, which is a widely known insurance company, and which we all know about, is at the moment forming a merger, in order to form a new company, with two German insurances, one of which is in Munich. I am sure there will be no difficulty about the transfer of assets or liabilities in respect of their customers between these companies, not to speak of shares. I have not heard of them going to the German Government or to the House of Commons to have legislation introduced. I am still baffled as to why a simple merger was not sufficient and why legislation creating a legal entity was desirable here and apparently is not necessary in Great Britain. From the Minister's speech, with all respect to him, and from the discussion so far, and I have listened attentively. I have been unable to grasp why.
The National Bank has been registered in London since the middle of the nineteenth century— I forget the exact date. It was established and registered first in Ireland and by reason of the necessity to get cheque clearance facilities in London, they decided to register in London and since about the middle of the last century, it has been registered in London and since then has been an English company. The English company will, if you like, hive off portion of their holding in Ireland. Therefore, the National Bank will no longer be extant in Ireland. It had to be registered as a new company in Ireland. It does not fall to be registered in England now.
Would the Minister repeat that? I did not hear him. I do not believe he really meant what he said.
The National Bank is registered in London and therefore legally it is an English company. The Bank of Ireland proposes to purchase the interests in Ireland of the National Bank and to set up a new company.
That, in itself, would not require an Act.
It would not, in itself, require an Act, but in relation to the other two sections involving the transfer of securities, it would.
Not, once you have passed section 2.
In order to get the consent of other bodies interested, including the shareholders, the enactment of legislation in Ireland was declared essential. That is the reason for the enactment of this legislation.
It is necessary to exclude the National Bank Act for liability to Irish deposits. That is the only reason why it is necessary. That is what section 2 does. We have already passed that.
We are still on the whole Act.
The whole job could be done without any Act.
Is the National Bank or as much of the National Bank as is based in England —they have 39 branches in England— entirely divorced from the Irish branch? Are they still awaiting the consent of the shareholders?
They are.
Have they had, or are they going to have, any legislation in the United Kingdom to deal with the transfer of this National Bank? If they are not going to have legislation in the United Kingdom to deal with the transfer of that portion of the National Bank to the Commercial Bank of Scotland, why have we got to have legislation here? That seems to be Deputy Hogan's question. I do not think the Minister has given a satisfactory answer.
In Britain, they are transferring the shares to the National Bank of Scotland. In Ireland, they are setting up a new company.
(South Tipperary): Why?
That is the whole trouble about this Bill. Many people who feel unhappy about this matter are trying to get information. The Minister has not told us yet. He has only told us that the Bank of Ireland wanted a Bill. I can appreciate that because they are going to swallow up the National Bank. Why can the National Bank not stay on it's own? Surely they have sufficient money to be able to do so. It is a solvent bank in every way.
This Bill will not matter at all, if the shareholders do not agree to the proposal tomorrow.
I cannot see any point in having it.
(South Tipperary): Why is the Bill necessary?
I am advised the Bill is necessary. I am not an expert on those things.
Surely the Minister is going to tell the House why the Bill is necessary. Does he know?
(South Tipperary): It is not necessary.
The Bank of Ireland want the Bill but they should have justified themselves by saying why they want it. I will give the Minister the answer. The Bank of Ireland want to swallow up the National Bank. The Government are conniving at that and it is a bad policy.
Is the Minister not going to tell the House why it is necessary?
I have told the house all I know.
The fact of the matter is the Minister does not understand and does not know.
Would the Minister explain exactly what section 4 is?
Without the provision in this section, the securities held by the National Bank would, on transfer, be terminated. They would, as a result, have to be renewed. Therefore, the priority position of those securities would be involved. The purpose of this section is to maintain the priority position of those securities.
The purpose of this is to avoid the necessity of registration in the Land Registry. Why not say that is the purpose of section 4?
Section 4, in relation to section 7.
Section 7 is stamp duty and section 4 avoids the necessity of registering deeds in the Land Registry.
It avoids the necessity of registration.
Why not say so?
Registration would involve priorities.
No; registration would not involve priorities. It would safeguard them.
That is what I mean.
This strange procedure arises here again. A person, who is not party to this legislation at all, has placed his securities, his documents, goods and other property with the National Bank. I do not want to embark on a long discourse on the implications of the law on bailment but the bailee of a customer's goods knows there are a number of very elaborate common law liabilities from which the bailee can discharge himself only by well recognised procedure. As I understand section 5 of this Bill, we relieve the National Bank Limited of all liability as bailee. I do not clearly see in the section the effect of the words "to create the liability of a bailee" in the National Bank of Ireland Limited for goods transferred. It may be there but it has escaped me. I would be glad to have my attention drawn to those words in this or some other section, if they are there.
Deputy Dillon obviously knows the implications involved in the obligations of bailment. This section transfers those obligations from what has been described the transferor to the transferee; in other words, the new holder of the bail would have the same obligations to the bailor as the present holder has. Therefore, that secures the interests of the bailor in respect of his goods. On the other hand, on transfer, he is entitled to withdraw his goods or his securities from bailment. Therefore, so long as he will have them there, the new bailee has the same obligations to him as the present one has.
I have differed from Deputy Dillon in regard to some earlier sections but so far as this section is concerned, the Minister has completely failed to make the proper case made by Deputy Dillon in relation to this section. This section, in fact, does what was suggested in an earlier section with regard to the right of private property. This section means that somebody who had some property and who entrusts it to A is no longer able to look to A to give him back his property. He must look for a new person, B, to give him back his property. That, to put it mildly, is a dangerous procedure. The Minister would be wiser if, in relation to this section, he met, frankly and sincerely, the difficulties in relation to the transfer of private property that we are concerned with here in this section. There could be a very grave constitutional argument in relation to that.
This could be contrary to the section of the Constitution which deals with private property. If a customer has certain property of his in the custody of the National Bank, the effect of this section is to exonerate the National Bank from all liability in connection with that property and to say that a new entity, recently formed, is to take over that responsibility. It is, if you like, travelling far in relation to the rights of private property so to delegate the rights of the customer. And there has been no suggestion by the Minister, no argument advanced by the Minister, no even tentative argument put forward, as to why this is necessary for the effective arrangement of the merger, adaptation, take-over—call it what you will. The fact, of course, is that the whole operation being carried through could be carried through without the Minister bringing in any Bill at all but it would have the effect of individual persons keeping and retaining their rights against the National Bank. The Minister coming in here and giving carte blanche exemption to the National Bank against the customers in respect of that has a duty to explain why it is necessary.
So far as section 3 is concerned, I, for one, feel his duty is discharged when it is made clear that, by that section, he avoids the stamp duty on the transfer which would otherwise be operative and which is exempt also under section 7, but in addition, he avoids the cost of the transaction, which would be very substantial and which would otherwise be added to the customer. But there is no advantage whatever to the customer in section 5. Section 5 does nothing except exclude the existing National Bank from any liability. Why should it be excluded? We have not heard any reason given by the Minister. If the Minister is going to exclude a person—and I use "person" in its legal sense of a corporate entity— from any liability, then it is up to the Minister, when he brings in a section of that type, to make a case, but he has made no case in relation to this section.
Deputy Dillon is entirely right when he says this section is a precedent which will be used again and again for infringement of the rights of personal property. Before it could be accepted in that way, it would be up to the Minister, or whoever has been or will be in the near future sitting in his seat, to explain clearly to the House why this is not something which will be a precedent for all time.
This forms part of the agreement.
Then the agreement is sacrosanct, over and above the constitutional right of private property.
People who have goods on bailment in this manner, in the manner of securing their overdrafts and advances, will have the same rights guaranteed——
This does not cover only people who have overdrafts but also people who have goods in safe custody.
——and the new legal entity will take over the obligations of the former one for the safe return——
But why should the former one be excluded?
As long as the new entity takes the full obligations of the former one, then there is no loss to the bailor.
How do we know?
At a given date, will the former one cease to exist as a body?
It will have to register here under section 35 (2) of the Companies Act which the Minister introduced, though he does not remember it.
I have not been dealing with it lately, like the Deputy.
We are arriving at the astonishing stage where a heavy silence falls in the House, and that is that. These are complex matters in which, very often, the House takes little interest but I have been long enough a member of this House to see precedents casually created because they had their origin in something which was complex and which had little popular appeal. I think the right to private property is a very important thing, not so important to somebody maybe who has too much of it, but it can be very important indeed to somebody who has just sufficient to carry on. It can be extremely important to organisations or bodies of people who come together for their mutual protection.
I see in sections 2 and 3 the encroachment which Deputy Sweetman has made clear. He appreciates at least more fully my problem in regard to section 5. The Minister said, in effect: "Well, I am giving the bailor as good a security as he had", but I do not think we have the right to put ourselves in the position of the bailor. It is for him to determine that. We have no right to say quite casually: "You chose to deposit your treasure, whatever it is, with the National Bank. We are now releasing the National Bank from the liability it undertook to you and transferring that to the National Bank of Ireland, in as much as we believe it is just as good a security, that the transfer will be deemed to be made by virtue of an Act of Parliament passed by this House". Suppose it turns out that it is not as good a security, what happens then, or what moral position are we in then? Suppose something did miscarry and it transpired that the security was not as good—but I do not envisage such a practical possibility in this country. Suppose it did arise, is it as serious as it is suggested, that an Act which effectively deprived someone of part of his property, passed by this Oireachtas, would stand. Think of the confusion that would be created, were the Supreme Court to declare this Act unconstitutional. That would be really something, as compared with the trouble and difficulties created if we did not pass sections 3 and 5. I have the feeling that the Minister for Finance has accepted this Bill on the recommendation of the Bank of Ireland and their advisors as being a very simple way——
The Minister is a simple man.
——of carrying out a complicated transaction, the end of which the Government approve and instead of saying to these banks: "Yes; we approve your proposal, but there is no use trying to find short cuts because they will require the Government to go further than they are prepared to go in this legislation. We must go a definite way about it.
I can best proceed by analogy. As far as the question of constitutionality is concerned, Deputy Sweetman raised the point of bailment in particular and suggested that what we propose to do here under that law is not constitutional. If I, as a private individual, hold the goods of somebody else on bail for any purpose— for fees, as security for advances of money I have made——
Or even gratuitously.
——and if I say to the bailor that I intend to go out of business, that I do not intend to reside here and that I do not wish to hold my obligation to him any longer but that if he likes I shall transfer it to John Doe down the road, in similar business——
If he likes.
——and if he does not like he may withdraw it from me.
If he does nothing you still have to keep it.
What I hope this section provides is that the National Bank are saying to the bailor: "I have your property. I propose to go out of existence. In my place will come the National Bank of Ireland and when it comes into existence, if it comes into existence, my intention is to transfer to that new entity the goods I hold on your behalf". The bailor who has made the deposit of the goods may say: "I shall withdraw my goods. I do not wish the National Bank of Ireland to hold them". However, if the National Bank of Ireland does hold them, what we are saying is that the obligation the National Bank had in respect of these goods will be transferred to the National Bank of Ireland. That is all we are providing for.
(South Tipperary): May I ask the Minister one question? It is partly out of line with the section, being of a general nature. Can he give me any instance of a commercial merger where there was preparatory enabling legislation introduced in this or in any other country?
It does not seem to arise on the section.
(South Tipperary): Is there any precedent for it anywhere?
If one can qualify the word "unique", this is a reasonably unique case. I do not think it has arisen elsewhere.
So the Bank of Ireland are creating a precedent or are asking the Minister to create one?
(South Tipperary): And he has not told us why.
This deals with staff of the existing National Bank. The last paragraph of the section reads:
Provided that for the purpose of ascertaining and calculating the right to pension or superannuation benefits, service or employment with the transferor shall be taken into account as if it were service or employment with the transferee but the transfer of service or employment from the transferor to the transferee shall not, of itself, give rise to any claim to pension or superannuation benefits.
I should be obliged if the Minister would clarify the last few lines.
I should also like clarification on portion of this section. It appears as if a precedent is being set by it. I do not know so much about what has been discussed earlier —it was difficult to follow—but it is easy to understand a situation where in State or semi-State employment it has been the practice for a number of years, on the merger of two companies, that if the person employed wishes to be transferred with full pension rights that is all right. But if he does not wish to be transferred for one of a hundred different reasons, that may be allowed, with pension and superannuation scheme in existence. My interpretation of this section is that employment is being offered at similar status, similar pay and similar pension rights in the new concern but if staff members do not accept, they must leave the service without any compensation whatsoever. Would the Minister explain if I am interpreting the section correctly?
No. The short answer to the Deputy is that existing rights of National Bank personnel are completely safeguarded. If somebody wishes to leave the service of the National Bank on its going out of existence—if he does not wish to transfer to the National Bank of Ireland—he is entitled to whatever pension rights he enjoyed. If he goes into the service of the National Bank of Ireland, he carries forward to his new service the rights he has picked up.
The section says the direct opposite. The last two lines say he does not have any rights if he does not continue in service.
It seeks to obviate claims to rights of double pensionable employment. A man cannot be retained as having service with two different organisations.
It seems to be a very cumbersome method.
A person may have officer service with the National Bank during a period of ten years. This transfer takes place and he goes from the National Bank to the National Bank of Ireland. Does he get his ten years' seniority and full pension rights? If he does, what is the meaning of the last paragraph?
He does. That is guaranteed.
He will be no better off but certainly he will not be any worse off.
What Deputy Esmonde fears is covered in the section. However, I should like to get clarification on the last paragraph of the section which states:
Provided that for the purpose of ascertaining and calculating the right to pension or superannuation benefits, service or employment with the transferor...
That seems to me to suggest that he carries his service with him, but the section continues:
... but the transfer of service or employment from the transferor to the transferee shall not, of itself, give rise to any claim to pension or superannuation benefits.
The Minister says this means an official cannot say: "I am entitled to a pension from the National Bank of Ireland in which I can subsequently establish a right to a further pension or gratuity." That is the Minister's explanation. One can also interpret it as stating that if a person decided he wants to terminate his employment in banking he is not entitled, on doing that, to avail of the superannuation and pension rights he had accumulated.
When I was practising law, I always thought it good to go to the locus in quo and look at the scene. In the same context, I think it is a good idea to give a practical example of a man who has been 30 years in the service of the National Bank. The National Bank goes out of existence. He continues for a further ten years in the service of the new bank, the National Bank of Ireland. For his 30 years service he has the full value of whatever superannuation benefits he has built up, and added to that he can get his ten years' service in the National Bank of Ireland. Therefore, he has 40 years' service. If, instead of getting that 30 years plus ten continuous service, he says he now has 30 years plus ten years under this section he has also ten years in the service of the new bank and he seeks superannuation rights for the 40 years plus the superannuation rights for the new ten years he has built up, he just does not get that. He gets one continuous period for reckoning purposes. The purpose of these words at the end of the section is to preclude the possibility of his claiming for 40 years continuous service plus 10 years extra service.
Does the Minister not agree that the words also bear the interpretation I put on them?
They could. Having got the explanation of the words I have just given, the Deputy has at least put into my mind the possibility of another interpretation of them. Between now and report Stage or the introduction of the Bill in the Seanad, I shall undertake to look into the matter to ensure the words have not the meaning the Deputy feels they might have and, if they have, I shall have them changed.
That satisfies me.
Could the Minister tell us how many employees are involved in the transfer? I mentioned earlier that there were 300 branches in this country. I understand I am entirely wrong in that. I think there are about 315 or 318 branches between here and Northern Ireland. I gather that the National Bank has more employees than any other bank in the State, with the exception of the Minister and Leinster Bank. I do not know the number myself. Perhaps the Minister could give us some indication as to how many there are?
Since the Minister is introducing this Bill on the direction of the Bank of Ireland, could he tell us if there is any guarantee of full employment or if he has received any information as to whether there will be any reduction in personnel or not? One of the reasons given for the merger is apparently that it will create greater efficiency. Greater efficiency often means less employment. There is considerable apprehension among the employees of the National Bank, not so much that they will be thrown out with nothing at all but that some may be retired at the prime of life to make way for other people. Can the Minister give the House a guarantee that the employment will continue, even though the name of the bank is changed and even though that bank is unfortunately going to be swallowed up by another bank, and so allay the anxiety of a great many personnel many of whom are married, have families and are looking to the future?
To answer the first part of the Deputy's question, I understand that there are about 1,100 employees altogether—750 men and about 350 women. I understand also that there is no question whatever about the security of employment of each of these people being in any way prejudiced. Not only that, but I am told on inquiry that inspectors went round to each branch of the National Bank and gave such an assurance to the staffs of each of the branches concerned. I understand from statements made by the Governor of the Bank of Ireland that in the new set-up they propose to have heads of branches, which will make for more efficient administration of the banks' business and more satisfaction to the public. Even with this new delegation of functions there is no question whatever of redundancy arising. On the contrary, I believe there may be greater opportunities for promotion.
The Minister says the existing staff will be guaranteed employment but the usual way in which this is dealt with is that replacements are not provided when retirements take place. Is there any danger of that happening?
That is a bit of a crystal ball operation.
It is not a crystalball operation because that has been the experience in every case I know where two firms came together for the purpose of greater efficiency. If they give a guarantee of continued employment what they mean is a guarantee for those in existing employment but not a guarantee of continued jobs. It very often means that over a period as low as four or five years the number of personnel employed in the merged firms is reduced by 25 per cent or more by not replacing retiring personnel.
I understand the intention is to maintain the existing branches as they are. That would obviously mean maintaining the complement of staff in them.
I would hope that would be it. This idea of efficiency has a ring about it sometimes.
Has the Minister read the bit about putting computers in to serve six or seven banks?
The strange thing is that computers do not take over human effort completely. On the contrary, I find in many cases they——
Make mistakes?
No, but they make for greater employment of human beings by reason of their extra efficiency.
Repairing them?
(South Tipperary): Is there any provision in the Bill for compensation if, for example, there is redundancy?
That is a difficult point.
(South Tipperary): Is there any provision for compensation for those who feel their promotional possibilities may have been affected by the merger and who choose to leave? In so far as this is the creation of a new company and, from the Minister's speech here, calls for the acquisition by the Bank of Ireland of the share capital of the new company of £12.2 million—£6.2 million in cash and £6 million in a new issue of Bank of Ireland loan stock—and in view of the fact that there is a general meeting of the shareholders of the National Bank next Thursday, have the Bank of Ireland shareholders been circularised about these proposals and will they have an opportunity to vote on the merger just as the National Bank shareholders are voting next Thursday?
There are no compensation provisions in the Bill. If there were, my assurance about there being no redundancy might be challengeable, if not challenged.
If Deputy Hogan were a trade union official, he would know that.
The opportunities for promotion will be much greater in that this will be a bigger and more complex organisation.
(South Tipperary): And equal to everybody?
The Bank of Ireland shareholders did have an opportunity of expressing their views on this in so far as they had to vote for the increased capitalisation in order to effect the purchase.
I assume the Minister will answer Parliamentary questions in future if these things we fear will happen do happen?
I shall answer them to the best of my ability.
Section 7 is the section which deals with the rates of stamp duty liable under transfer of credit and debit accounts in the National Bank to the National Bank of Ireland. But it says, at the end of that, in the explanatory memorandum: "It is not proposed to charge duty on the transfer of these accounts. Exemptions are not being granted in respect of the conveyances of real property". To me, "real property" seems to mean the transfer of the bank buildings. Will the Government get quite a substantial sum in stamp duty on the transfer of every National Bank building in this State to the Bank of Ireland?
At least a realistic value will be put on the buildings and the shareholders will know whether or not they have been "gypped".
Deputy Sweetman suggested I should have dealt with this matter in section 3. This is the section under which the value of the securities and the value of the deposits are not taken into account because they are not assets. They might be capable of being put on a balance sheet, and stamp duty paid to what was put on the balance sheet, but it would be unfair to ask the people involved in the transaction to pay the stamp duty. Therefore, it was thought fair and reasonable to confine the payment of stamp duty to the value of the real property which, as Deputy Esmonde has said, are the buildings, the actual bricks and mortar involved——
It would be a good thing that that should generally be known.
——and that will bring to the State about £100,000.
Will the State accept the valuation which appears already to have been put on the buildings or is it intended to have them valued for valuation purposes?
We accept the valuation, which is a recent one and which we are satisfied is reasonable.
Earlier tonight, the Minister was not prepared to say if, in fact, the valuation quoted was recent.
I did. I said it was recent.
I am sorry, if the Minister did say so: I did not hear him say that.
That is not the valuation that appears on the balance sheet. That is manifestly absurd.
It is. The Minister said it is a recent one.
The assets appear on page 9 of the paper circulated to the shareholders—"include an item, bank premises and other property, at cost, less amount written off." We all know that one of the classical notations of a bank to conceal deposits is to write off its properties. If the National Bank own premises in College Green and elsewhere in Dublin they would have the larger part of £3 million, not to mind all the premises they have throughout the English provinces and the Irish country towns. Are we to take it that the Minister expects the value of bricks and mortar to be transferred through this transaction at £2,818,964?
It would be slightly in advance of that for this purpose.
(South Tipperary): Not for the Irish shareholders.
The Minister said he was accepting that figure because it was a recent valuation.
It is.
It is not a valuation of bank premises. The balance sheet is very careful to say so. It says that there are bank premises and other properties, at cost, less the amounts written off. The balance sheet makes no pretence that this is a recent or a realistic valuation of this property. It brings to the attention of the shareholders the fact that it is not realistic and is not recent: it is less whatever sums the directors may in the meantime have written off. That valuation of premises is neither real nor realistic. It is notorious that some of the premises have been in the bank's hands since Daniel O'Connell was wearing his hat. We are assured that they appear in the balance sheet at what they cost less whatever sums the directors may in the meantime have written off.
Surely the Minister will now appreciate the reason why I asked him the question and why I was so anxious to find out if, in fact, this will do what the Minister says it will do. Could we now have some information as to whether or not a valuation will be carried out and, if it is, if there will be a realistic value and if this will considerably alter the whole situation? It does appear that what Deputy Dillon says is correct and that what is contained in the balance sheet shows a very much lower valuation than the actual cost of the erection of the buildings, not to talk of their present-day value.
There were two items subject to stamp duty, that is, the duty on capital increases which is apart from the buildings and the duty on the buildings themselves. This is a matter for negotiation between the Revenue Commissioners, my Department and the people involved. The total amount of duty payable is consistent with the amount attributable to the value of the bank premises, having regard to a recent valuation.
Quite recently, I asked the Minister a question. My suggestion was that, on his raising £2¾ million, they would vest in him every premises belonging to the National Bank which he would be free to sell on the open market. Does he seriously suggest that there would be no profit to be made on that transaction? I am not a shareholder in the National Bank. I do not know why I should worry so much about them, but does the Minister think that the valuation of £2,818,964 is a realistic present valuation of all the properties belonging to the National Bank? I think it would be much better for the Minister, seeing that he is sponsoring this legislation, to meet these kinds of questions headon because these questions are being asked. There are small shareholders in the bank. They cannot be blamed for feeling that over and above their own directors the Minister for Finance has some responsibility to protect their interests in view of the fact that he is sponsoring this legislation.
I do not believe there is anybody in Dáil Éireann who regards a figure of £2,818,964 as a realistic valuation of these properties but I should like to hear the Minister say that he does if that is his honest opinion.
Would the Minister hear my mind on the subject? If I understand Deputy Tully, he is asking the Minister to increase, I think astronomically, the valuation of the various branches in the country as real estate. If that is so, and the value is increased to a very large extent, there will be very much greater stamp duty payable on it at the expense of the shareholders. Does anybody want that? It is the shareholders who will be paying it.
Surely Deputy Costello does not suggest that simply because it happens to be a bank that is transferring and shareholders are involved it should be able to say that the property is worth very much less than it is, in fact, worth?
Of course I do not, but what I want to know is what we are at. Are we increasing the value in order to make the shareholders pay more stamp duty?
Usually when property is being sold, as in this case, a realistic value of the property is set up for the purpose of stamp duty. Is there to be an exception because a bank is involved? Are we to say that everybody else must have a realistic valuation but that the bank must not? The 130 branches throughout the country, plus the head offices in Dublin and the property in Britain, we are told, are worth a relatively small sum and it is suggested now that we should not interfere with what they say, that we should ask the Minister for Finance to close his eyes to the fact that they are worth very much more. If that is to be the situation, then let us do it, but let us do it with every type of property passing from one person to another and liable to stamp duty.
That is not the point. The shareholders are the owners, I presume, of the bank. The bank is administered by the directors. The shareholders are the owners and entitled to get the full value of the bank. You cannot have it both ways. Apparently, the value of the premises has been whittled down considerably. Therefore, the value of the shares the shareholders hold has been brought down. I do not agree with that but there is no reason why anybody should try to create the impression here that the banks are valued at a very low price for the sole reason of trying to get increased duty paid to the State. I do not think Deputy Tully will find himself very popular with any shareholders who are considerable in number and who may vote for him.
May I try to resolve this? The revaluation of the premises, as I said, was a very recent one and it was done to assess the value of the property for the purpose of the transfer and the value of the property for the purposes of payment of stamp duty. That revaluation amounts to about £3.5 million as far as the property of the National Bank in Ireland is concerned. It is on that basis the shares were assessed. It is on that basis the stamp duty on the property in Ireland was assessed.
And that includes the banks in the Six Counties?
Yes, that is right.
I only want to clear one thing in Deputy Esmonde's mind. As far as I am concerned, I do not mind whether there are shareholders in a bank who may change their opinion of me as a result of what I am saying here tonight. All I am saying is that if the property is undervalued, something should be done about it, or alternatively we should decide that in future when property changes hands, we should accept values 100 years old and let it apply to everybody.
It would be valuable if I could get the Minister to tell the House that the figure appearing in this balance sheet is not the figure present to his mind, that the figure present to his mind was a separate figure which he is satisfied is realistic and is appropriate for assessment of stamp duty.
(South Tipperary): £3.5 million.
If he is also in a position to say that of his own knowledge the figure on which he thought it equitable to assess stamp duty was the figure used by the directors of the National Bank in the course of their dealings with the Scottish Bank, it is very valuable that that should be made manifest to the shareholders of the National Bank, and if the Minister of an Irish Government says that that is a fact, I accept it as a fact.
That is a fact.
It is valuable that that should be placed upon record when we are dealing with a matter of this kind because there are a good many people who have raised their eyebrows a bit and said the figure in the balance sheet was not realistic. I think the Minister's elaboration of that clarifies the position and clarifies it usefully.
We all accept the Minister's statement now but it is rather a pity we did not have it 15 minutes ago.
You would not hear a lot of things if I were not here to get them for you.
(South Tipperary): I am very pleased that at last we have succeeded in prising out of the Minister the figure of £3.5 million which he says applies to the banks in Ireland alone, that is, the Twenty-six Counties and the Six Counties. He spoke with some hesitancy. I presume he has had an opportunity to look at it since.
I mentioned that £3½ million a quarter of an hour ago.
(South Tipperary): Did you? There is a very different figure mentioned here. That is the information, apparently, given to the shareholders.
The balance sheet of December, 1964, I think.
(South Tipperary): Is not the real difference as between the figure the Minister has given here and the figure that has been given to the shareholders based upon company law which specifically exempts banks from giving their inner reserves?
This statement is dated 1st February, 1966. It is quite conceivable, and I think the explanation is, that as at 1st February, 1966 the balance sheet for the year 1965 was not yet available. Therefore, the nearest balance sheet was the balance sheet as of 31st December, 1964 which contained the valuation of the property at that time.
The Minister need not go on that line.
I did not go on that line. The figure I mentioned earlier was £3½ million as the up-to-date valuation of the property for the purpose of the transfer of the shares of the National Bank to the Bank of Ireland and the National Bank of Scotland and for the purpose of the Revenue Commissioners collecting stamp duty for the transfer of the property of the bank in Ireland.
(South Tipperary): I take it this is the first time the shareholders will have heard of that figure?
That I do not know.
(South Tipperary): How much does the Minister expect to get by this merger? How much extra does he expect to get in income tax?
I should like to get notice of that question.
(South Tipperary): A Parliamentary question has been put down to the Minister.
The Deputy will hear from me, so.
I take it, Sir, that we may assume that section 8 does not operate in any way to change the law except in so far as it substitutes the National Bank of Ireland for the National Bank?
The National Bank of Ireland for the National Bank in statutes where it is already mentioned.
Otherwise, it does not change the law?
No, it does not change the law.
Report Stage?
Could we have it now?
Tuesday next.
There is a difficulty about trying to get this Bill through the Oireachtas before 31st March. The Budget will be on 9th March and I will be fairly well committed from then until the end of the month. Would it be possible for the House to give me all Stages so that I may get the Bill through the Seanad next week?
It was felt, if it would not inconvenience the Minister, that it could be taken on Tuesday and disposed of on Tuesday.
(South Tipperary): The Minister has promised to look into a couple of points.
I said between now and the next Stage, which I hoped would be the introduction of the Bill in the Seanad. However, if the Opposition do not want to give it to me, it will make my job very difficult.
May I suggest to Deputy Jones that, to facilitate the Minister, we might take it on Thursday morning?
That would suit me fine. If, by any chance, Deputy Dillon's suggestion incommodes the Opposition to any great extent, I would be prepared to forgo taking it on Thursday morning.
We will leave it that way then.
Members of the Opposition will appreciate that I have to meet scores of deputations as well as looking after business in the House.
The Minister will be meeting another deputation after the meeting of the Committee on Procedure and Privileges tomorrow.
We will leave the matter that way then.