Vol. 438 No. 1
15 Mr. Yates asked the Minister for Finance the Government's policy in relation to the future ownership and development of the ACC, ICC and Trustee Savings Bank arising out of a recent Government working party report; and if it is still intended to honour the commitment in the Programme for a Partnership Government, 1993-1997, to establish a third banking force.
There has been no change in Government policy to create a third force in banking. The objective of this policy is to increase competition in the banking sector while protecting — and enhancing to the extent possible — the developmental role which the State banks can play in fostering industry, especially small and medium sized industry. Proposals to give effect to this policy have not yet come before Government. The Government will consider the matter when I am in a position to present firm proposals. No Government working party, or official working party of any kind, has to date been established in connection with Government policy in relation to the State banks. No working party report has, accordingly, been prepared.
The Deputy will be aware from my reply to a related question on 12 October last that I and my Department have been engaged in extensive consultations with relevant parties and in a comprehensive survey of the options available to give effect to the programme commitment to the creation of a third force in banking. Considerable progress has been made in clarifying and teasing out the steps that will have to be taken in order to achieve the desired objective. This preparatory work is continuing.
The issues involved in this question are many and complex. Any decision has implications, not just for the institutions immediately involved but also for the wider financial system. I am, therefore, determined to take the necessary time to fully explore all the options and only when I have done that will I be in a position to put firm proposals to Government.
Is the Minister aware of the cloud that hangs over the management of those three banks because they do not know where their future lies? A commitment was given in the Programme for Government that they would be merged, yet the Minister did not make us any wiser when that matter was referred to in the Dáil. Having met the management of all three banks, is the Minister aware that they have one common requirement, namely, an equity injection for expansion? If the taxpayer will not invest equity, how will a merger solve the problem of three banks that are under-capitalised? Perhaps the Minister will tell us what Government policy is in that regard because the policy set out in the Programme for Government does not meet the major problem of the three banks in question?
As I stated previously, there are only two or three short paragraphs in the Programme for Government which deal with this matter. Since then the issue has been teased out in formal departmental and informal contacts with the institutions concerned. Deputy Yates is right in that they hold different views. They would all have some difficulty with liquidity problems and ratios if they were merely to amalgamate. Deputy Yates will recall that an important aspect of the Programme for Government was the possibility of involvement with a major international bank which would be examined in accordance with the bank's needs. As the Deputy will be aware, there is no shortage of financial institutions who would be glad to be involved in this arrangement. That equation must be considered as it would be desirable to get involved with a new structure. Otherwise we will not resolve the difficulty the Deputy raised.
A sum of up to £70 million was provided in the budget White Paper for privatisation receipts. Will the Minister clarify whether the sale of the ACC or any of the banks is pencilled in as part of that provision or are we talking merely about Irish Life? Will he give a time-scale in which the Government might reach conclusions in regard to the third banking force or if it will drop the idea which, as the Minister is aware, was daft in the first place?
In reply to the Deputy's first question, there is no question of a sale of the ACC, the ICC or the Trustee Savings Bank in the figures in question. We have merely included some small areas, if necessary Irish Life, as I stated at a press conference last week.
In regard to the Deputy's second question, I would like to see the matter brought to a conclusion midway through this year. That would be an appropriate time-scale towards which to work.
