Adjournment Debate. - Development of Trustee Savings Bank.

I thank the Chair for facilitating this brief debate because it is a matter of the utmost gravity on which the public spotlight should be focused. What is emerging is the fact of secret negotiations and a lack of accountability and transparency in a matter of direct concern to the taxpayer.

The Trustee Savings Bank is the subject of the Trustee Savings Banks Act, 1989 which provided that if the bank were ever sold out of its present ownership structure the proceeds would fall due to the Exchequer. It is reckoned, on last year's accounts, to have assets of £1.2 billion, an annual profit last year of £15 million and about 1,000 employees. There have been reports in the last few days that the dismissal of a chief executive of one of the top five banks was in some way connected with National Irish Bank acquiring the Trustee Savings Bank. A statement from the Trustee Savings Bank board did not deny that discussions have been taking place. I am now told that these discussions have advanced to a stage where Mr. Lacey is to be replaced by Mr. Harry Lorton, the boss of Trustee Savings Bank, and that a provisional agreement has been reached. Last Thursday I questioned the Minister in the Dáil about the future of the three State banks, ACC, ICC and Trustee Savings Bank and got no indication whatever of this move. It is stretching credibility to suggest that the Minister did not know what was going on. He should have known.

It has been suggested that in the context of any proposal by the Trustee Savings Bank board to sell it, the Government's position is that unless a purchaser takes the ICC as well, such sale will not be approved. Is this Government policy? That is a most serious development which should be clarified because there would be clear implications for employment in ICC, which the Government has been trying to flog for many years.

We are dealing with something that is worth £200 million in the context of Trustee Savings Bank or ICC and it would be unfair if there were anything other than open tendering so that the taxpayer would get the highest price. It is unacceptable that those who bid in 1991 for the Dublin Trustee Savings Bank, namely, Woodchester Bank, Irish Life and Ulster Bank would not get a look in this time around. This smacks of a sweetheart deal done in secret. That is no way to conduct public affairs. Having checked the legislation of 1989 and the ICC Bank Act, 1992, I humbly submit that an order of this House would be required in regard to any sale of Trustee Savings Bank and, if a majority of the stake of ICC were to be sold, it would require new legislation — only a minority stake of ICC can be sold under the present legislation. This would, therefore, be in order on the Order of Business, although the Government would want to avoid those questions.

I want a commitment from the Government that the taxpayer will get top dollar if Trustee Savings Bank is sold. I have no ideological objection, but the Labour Party has been shafted on this. Its proposals in the Programme for Government to form a super State bank have been dropped. That is sensible. The proposal was daft from the outset. It is vital, however, that we have transparency and accountability, that the taxpayer gets the maximum amount of money and that everybody gets a fair crack of the whip so that the best strategic interests of the employees and this bank can be developed together.

As matters are developing, I am concerned that we will be faced with a fait accompli, a package deal which will not allow this House, the taxpayer or the employees of the Trustee Savings Bank or ICC adequate input into these important decisions.

I join with Deputy Yates in thanking the Chair for his creative use of the Adjournment debate to discuss this important matter.

On 1 February I put down a parliamentary question asking if the Trustee Savings Bank was involved in the evolution of a third banking force. The Minister said that it was but he had had no meetings with the Trustee Savings Bank. On 28 February he said, by way of letter, that he had inadvertently misled me. I accept that it was not intentional. He said:

It is now brought to my attention that I met the Chairman of the Trustees and the Chief Executive of the Bank in November 1993. At that meeting, as in the various meetings held with other relevant institutions, I made it clear that the purpose of whatever initiative is to be taken in relation to a third force is to increase competition in the banking sector.

I agree with Deputy Yates that these manoeuvres have been carried out in secret and without accountability. What the Minister means by developing competition in the banking sector and the evolution of a third banking force is distinctly different from the notion enshrined in the Programme for a Partnership Government. It also effectively constitutes privatisation and, therefore, would be a major development in the banking sector which would have serious implications for the Government's platform in the Programme for Government. On 2 November 1989 the then Labour spokesman on Finance, Deputy Mervyn Taylor, said in the Dáil:

The Minister is gearing himself up and preparing the powers for himself to do a Thatcher operation on the Trustee Savings Banks . . . the intention in the medium term is to privatise this national asset and sell off this magnificent potential for the Irish people to their friends, [In Fianna Fáil] their backers and supporters in the private sector . . . I look forward to an assurance that not 5 per cent, not 10 per cent nor even 1 per cent of these banks will be allowed to fall into the hands of the private sector creditors . . . I say, hands off the Trustee Savings Banks. They are private property and must remain in the public domain.

He was directing his comments at the man who is now Taoiseach, then Minister for Finance. He himself is now at the Cabinet table in a very good position to ensure that this asset remains in public hands.

The sale of the Trustee Savings Bank would not only be a breach of the commitments given by Labour about privatisation, it would also inflict a possibly mortal blow to the proposals for a vigorous third banking force promised in the Programme for Government. In the programme it is stated: "The Government will develop a vigorous third banking force from within the State sector by merging the ICC Bank and the ACC Bank and by seeking a merger of the new entity with Trustee Savings Bank". If the Trustee Savings Bank is sold off to the Australians, the value of any third banking force will be limited. The Trustee Savings Bank's 69 branches, 1,000 staff and assets of more than £1 billion are essential, and it is doubtful if, without them, any new third banking force would have the strength or resources to offer a genuine competition to the existing banks.

It is now more than 15 months since that programme was agreed, yet this is the first development that has emerged as a result of the extraordinary happenings in recent days. There is a stronger case now for a third banking force than in December 1992. The commercial banks have little concern for the overall needs of the economy. They regard their customers as primarily a source of profit maximisation. In terms of the developmental role of a third force in banking, not to mention the competition it would provide in the banking sector, it is essential that the Government proceeds with its plan as outlined in the Programme for a Partnership Government. It now emerges that the Government has a distinctly different view of what is meant by competition in the banking sector than that agreed by the Labour Party when it entered Government. I look forward to the Minister of State, Deputy Fitzgerald, explaining how this developed and how she sees the evolution of a third banking force.

The Deputies opposite are confusing private discussions between two banking groups with public policy. Such private discussions are not public policy.

An efficient banking system is of fundamental importance to economic development. In view of that, the Programme for a Partnership Government 1993-1997 indicated that it would be Government policy to create a third force in banking. The objective is to increase competition in the banking sector, while protecting and enhancing the developmental role which State banks play in fostering industry, especially small and medium sized industry. As Deputies will be aware, the proposal to establish a third force in banking involved at the outset the ACC bank, the ICC bank and the Trustee Savings Bank. Proposals to give effect to this policy have not yet come before the Government, but work is ongoing in the Department of Finance to finalise those proposals.

Unlike the ACC and ICC banks — which are owned by the State because it owns the vast bulk of the shares — the Trustee Savings Bank is governed by a board of trustees who have control over the day-to-day management of the bank. In that respect, it was always accepted that the Trustee Savings Bank would have a key role in determining its long term future and that role must fit in with the overall Government policy for developing our banking system.

Under the terms of the Trustee Savings Bank Act, 1989, the board of trustees are free to enter into discussions with third parties on proposals for the bank's future development which they will submit to the Minister for Finance for consideration. As stated by Deputy Yates, under section 57 of that Act proposals by the board of the Trustee Savings Bank have to be approved by both Houses of the Oireachtas. It is for this House to decide, not for the trustees.

What will the Government decide?

Let us hear the Minister.

They may propose, but it is for this House to dispose. It is for the trustees to develop proposals which are likely to be acceptable to Government while meeting their requirements for the future of the Trustee Savings Bank.

So far the Minister has not received proposals from the Trustee Savings Bank on its future development. I would stress in the strongest possible terms, that no decisions have been taken. It is impossible to make decisions on proposals which have not been received.

Hear no evil, see no evil.

That is a cop out.

The House will no doubt be aware that the trustees of the Trustee Savings Bank issued a statement on 25 April indicating that the board of trustees had been for some time evaluating the many strategic options available to the bank for its long-term development. Their statement also indicated that as part of this process, consideration had been given to a number of options to determine if the trustees could develop proposals which could be recommended to the Minister for Finance. Their statement went on to say that this process was continuing and may result in due course, in proposals being made to the Minister whose authority must be sought if there are to be changes in the status of the Trustee Savings Bank. The Trustee Savings Bank statement concluded by indicating that recommendations should not be made unless the trustees of the bank are fully satisfied that the long-term interest of the staff of the bank and its customers is being served.

The Trustee Savings Bank Act, 1989, does not contain provisions which would prevent the trustees from making proposals to the Minister for Finance on its future development.

His assent is necessary.

However, under section 57 of the Trustee Savings Bank Act, 1989, proposals to change the status of the Trustee Savings Bank would have to be the subject of an order which would have to be approved by both Houses of the Oireachtas.

What is the Minister's policy?

As the Trustee Savings Bank have not submitted proposals to the Minister for Finance it is not possible to say how such proposals might relate to the provisions for the third banking force included in the Programme for a Partnership Government 1993-1997. Any proposal submitted to the Minister for Finance by the board of trustees of the Trustee Savings Bank will be carefully considered against the background of the Programme for a Partnership Government and account will be taken of the interests of the taxpayer, the banking system in general and the customers and staff of the Trustee Savings Bank. In the final analysis, the Trustee Savings Bank can only make proposals to the Minister for Finance.

Is everybody going to get a fair crack at the whip?

Let us hear the Minister's concluding remarks.

Those proposals cannot be given legal effect——

Who is running the country?

The Government will run the country and if it receives proposals it will examine them. Unlike the Deputies, the Government is not acting on newspaper speculation on reports. We are examining a third banking force.

Why did the Minister meet Jim Lacey today?

Let us not indulge in personalities.

The Minister did not meet Jim Lacey.

This is a cop out, it is not an answer to our question.

The Minister, without interruption, please.

Where is the Minister tonight?

In the final analysis, the Trustee Savings Bank can only make proposals. It is up to the Minister for Finance, the Government and this House to make decisions and any decisions made will be brought before this House.

The Government is making the policy.

If the Deputy listened he might hear something. These proposals cannot be given legal effect unless the Government agrees to them and recommends them in the form of a draft order to both Houses of the Oireachtas, which must receive the assent of both Houses.

Proposals which trustees of the Trustee Savings Bank recommend to the Minister for Finance would have te be subject to detailed analysis before a recommendation to Government could be formulated. It is essential that any proposal for the development of the Trustee Savings Bank are consistent with the proposal in the Programme for a Partnership Government for the development of a competitive banking system and the needs of the overall economy, including employment.

Deputy Yates asked why the sale of the Trustee Savings Bank should not be conducted through a competitive tendering procedure. The Minister for Finance has not received proposals from the Trustee Savings Bank, therefore, it is premature to comment on disposal or methods of disposal. As the House will be aware, it is Government policy to use competive tendering procedures where appropriate. Proposals involving the future of the Trustee Savings Bank would have to be examined against the background of the unusual legal structure of that bank. It would also be necessary to consider how the proposals met the perceived need, as outlined in the Programme for a Partnership Government, to increase competition in the banking area while protecting the interests of the taxpayer, the banking system in general and staff and customers of the Trustee Savings Bank.

How many authors drafted the Minister of State's script?

Please, Deputy Rabbitte, desist.

It would, therefore, be necessary to evaluate proposals which might be received before coming to conclusions on the recommendations to be made to the Government.

This is a whitewash job.

It is the work of four authors.

Proposals made to the Government will be considered in the light of commitments in the Programme for a Partnership Government.

The question tabled by Deputy Rabbitte refers to the National Australia Bank. As the Deputy will be aware from a reply from the Minister for Finance to a question on 12 October last, the Minister knows that the National Australia Bank had an interest in the Governments' proposal to create a third force in banking. If the trustees of the Trustee Savings Bank decide to recommend a proposal involving the National Australia Bank——

Why is the Minister screwing the Ulster Bank? What has it done wrong?

——it will be examined to see if it meets the requirements I have outlined. As such a proposal has not been received, no such examination has taken place. An examination would determine the recommendation to Government. In the absence of a proposal from the board of trustees of the Trustee Savings Bank, no useful purpose can be served by speculating about what such a proposal might contain.

This is Greencore all over again. The Government botched Greencore and now it is moving in on the Trustee Savings Bank.

Order, the Minister's reply concludes the debate.