I move:
That Dáil Éireann approves the following Order in draft:
Trustee (Authorised Investments) (No. 2) Order, 1977,
a copy of which Order in draft was laid before the House on 4th October, 1977.
The Trustee (Authorised Investments) Act, 1958, defines the investments in which trustees may invest trust funds unless expressly forbidden by the instrument, if any, creating the trust. Equally, the trust deed may confer wider powers of investment but many trusts and analogous funds are restricted to the investments authorised under the Act. The Minister for Finance may vary the authorised investments by order.
The draft order now before the House for approval would add the five major Irish building societies, 19 non-Associated Banks, the Bank of Ireland Gilt Edged Unit Trust, and Securities of the European Investment Bank, to the authorised list.
It has been generally regarded as desirable for some time that trustee status should be accorded to building societies. The five societies named in the draft order are major financial institutions and their social importance as providers of finance to meet the community's housing needs is beyond doubt. These five societies, which together represent over 90 per cent of the resources of the building society movement are well established and have a proven operational record over a long period. Furthermore, the improved regulatory provisions in regard to societies effected by the Building Societies Act, 1976 provides an additional assurance that high standards of financial management will be observed in this area. I have agreed with the five societies on appropriate financial criteria to be observed by them in relation to trustee status. I am satisfied that they are suitable for addition to the trustee list.
I am also proposing to add deposits with 19 non-Associated Banks to the trustee list. I regard this as a necessary up-dating of the list, because as presently constituted, it remains in the form enacted by the Act of 1958, in so far as deposits with banks are concerned. Since then, however, the number of licensed banks operating in the State has increased considerably—to a total of 43—and a system of licensing and supervision by the Central Bank has been established under the Central Bank Act, 1971. The addition of suitable banks to the trustee list is desirable in order to equalise competition in the banking field. Furthermore, an increase in the number of banks in the trustee list, together with the other additions I am proposing, will considerably improve the range of investment opportunities open to trustees. I have consulted the Central Bank regarding banks which might be suitable for addition to the trustee list and the banks have recommended the 19 non-Associated Banks named in the draft order for addition to the list of authorised trustee investments. The addition of these banks will mean that the trustee list will include a total of 25 licensed banks comprising all the major domestic and foreign banks in the State. The list will remain under continuous rview and further changes can be made in the future if considered appropriate. In making its recommendations the Central Bank was concerned that there should be further opportunities to vary the list of authorised banks and I agree that this is desirable.
The Bank of Ireland Gilt Edged Unit Trust is registered under the Unit Trusts Act, 1972. The trust's investments are confined to Irish Government securities which are themselves trustee investments. The trustee of the scheme is the Bank of Ireland whose own stock is an authorised trustee investment. The trust has performed well since its inception in 1973. I am satisfied that it is appropriate for addition to the authorised list.
Finally, the draft order proposes to grant trustee status to securities issued in the State by the European Investment Bank. This is in fulfilment of a commitment entered into on our accession to the European Economic Community. The European Investment Bank, which was established by the member States under the Treaty of Rome, has as its primary responsibility the making of loans towards the financing of projects for developing the less developed regions of the Community, including Ireland. This country has received over £100 million in loans from the bank since joining the Community in 1973. The European Investment Bank has not sought to issue securities in the State to date and I do not expect that it will do so in the foreseeable future.
The Minister for Finance is obliged under the Trustee (Authorised Investments) Act, 1958, to consult with the following persons in regard to the terms of any order he proposes to make to vary the list of authorised investments—a Judge of the High Court nominated by the Chief Justice, the Governor of the Central Bank, the Public Trustee, the Chairman of the Irish Banks Standing Committee, the President of the Incorporated Law Society of Ireland and the President of the Stock Exchange—Irish Unit. All the statutory requirements in this regard have been complied with.
In conclusion, I wish to confirm that I am satisfied that a trustee should be enabled to invest in the additions to the trustee list as proposed in the draft order. Many of them have been longawaited and will, I believe, be generally welcomed. I, therefore, commend the motion for the approval of the House.
