Vol. 443 No. 6
9 Mr. Yates asked the Minister for Finance the steps, if any, the Government intends to take in the context of its dissatisfaction with the profit margins, handling charges and interest rate differentials being operated by the banks at present.
As the Deputy may be aware, the Taoiseach has already indicated that he is arranging, together with the relevant Ministers, including myself, to meet with the chairmen and chief executives of the banks and other major financial companies to exchange views in relation to how best the financial sector can contribute to the development of the economy.
Do I take it from the Minister's terse reply that the Taoiseach's comments were merely a puff of smoke, a cheap jibe at the banks to try to garner votes for Fianna Fáil? We all experience anti-bank feelings at times. Is it correct to say that the Government has absolutely no detailed proposals on bank handling charges, profit margains and that his reply exposes the Taoiseach's cynicism and hollow approach to this problem?
The Taoiseach gave a very full explanation of his views on this matter when he replied to questions last week. I have no doubt that at the forthcoming meetings full discussions will take place on bank profit margins, handling charges and other issues which business interests have raised with Government.
Is the Minister aware that small and medium sized business, farmers and personal borrowers have to bear excessive bank charges? Has he any plans to make the system more equitable so that borrowers have access to loans at reasonable rates? It is very disappointing that the Government appears to be kicking to touch and has no plans to address this ongoing vexed question of bank charges, levies and excess profits at the expense of the small borrower.
The Deputy can be assured that the Government has been working on this for the past year or so and the Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, has been involved in preparing legislation to deal with bank charges. It is proposed that they be referred to the Director of Consumer Affairs.
The level of bank profits is an ongoing issue. The trend in interest rates has been positive during the past months. Members, including the Taoiseach, have expressed concern about interest rates in view of the importance of small businesses to the economy and the banks should ensure that the full benefits of reductions in inter-bank rates in the past year are passed on to all customers, and not just AAA customers.
I have welcomed the banks' initiative on several occasions and have tried to encourage the special schemes initiatives, some of which have been worked out with the ISME and the Small Business Association. We need more of this. What it comes down to is that the banks believe they are allowed the 5.5 per cent matrix over the inter-bank rate but this will have to be addressed in discussions with the Taoiseach.
The issue I raised has not been addressed. I accept that interest rates have come down but this is a worldwide trend over which we have little control. The Minister, however, has not addressed the issue of bank charges which are a huge impediment to small businesses. When will they be addressed?
The Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, has addressed that issue substantially. Charges will be examined in a different way in future. This is one of the four or five items on the Taoiseach's agenda. The Deputy will be aware that last year when some of the banks increased their charges the Government, business and other interests made known their views that they did not consider they were justified. The banks say there is another side to the story and it is not my task to outline it. The banks have put forward their detailed views on their profitability and how they must control deposits and those issues must be discussed with the Government.
Does the Minister accept that regardless of the banks' view, it is the universal view of small businesses and the personal client or consumer of the banks that they are being subjected to excessive charges in one fashion or another. That has been the case for a considerable time. Does he accept that those people will see the Taoiseach as merely huffing and puffing unless some tangible sign of progress is made with the main commercial banks? Is it not time that the Taoiseach put up or shut up so far as small businesses are concerned?
In the discussions which will take place shortly, the Government will put forward not only its views but those expressed by industry, farmers and small business people. Deputy Rabbitte is correct about the universal view. I have prepared data for the forthcoming meeting from records in the Departent of Finance reflecting the position on the margins over a number of yeas. There does not appear to be questions to be answered on this. The banks should be given an opportunity to put forward their view. A pattern developed over a number of years. I do not wish to be unfair to the banks they have a view of this. Recently, one bank produced data to give balance to the argument. Last year it lost £25 million in the small business sector. Such data must be analysed. I cannot say the banks have not given me the facts or are telling untruths as they have data to support their case. Banks are an important part of economic development. Representatives of every organisation with which I and other members of the Government meet, raise the issue of the difficulty of securing bank finance. Some of my colleagues have spoken publicly on this issue. Yesterday, I met the owner of a substantial business in the city on a different matter but that issue arose.
Is there another passport on the way?
This person is from Wexford.
He should give me a call.
The Deputy will be pleased to hear he is trying to create a few more jobs with his money. This person, who is well known said he found the banks difficult to deal with and, unlike those to whom the Deputies referred, I am sure he would not have to beg for £5,000.
Will the Minister agree that the banks are on the weakest ground in the areas of handling charges? Is he aware of the recent case in Cork where the Southern Health Board tried to negotiate its handling charges with no success but when it shopped around it was able to save some £200,000 on handling charges? Will the Minister accept that is the Robin Hood principle in reverse, robbing the poor to pay the rich whereby the largest clients can get the AAA rates as against the A rate and fare better on handling charges now that they are negotiable? Does he not agree that small business people and personal customers are being ripped off in the area of handling charges?
The Taoiseach and a number of Ministers will meet the executives of the banks and outline work carried out in a number of Departments since the formation of the Government. It would be easy to start a ritual. We will express all the concerns about which representations have regularly been made by farming and small business interests. We will put forward our view on developments in the past number of years. I look forward to the dialogue with the banks which have an important role to play. We will point out how they could help create jobs.
