In July 1994 consultants were appointed by my predecessor to identify the various options available to the Government in respect of ACC Bank, ICC Bank and the TSB. The consultants completed their report in October 1994 and presented it to the Department. On the basis of this study, proposals were prepared for the Government which set out a particular view on the way forward. When I took up office as Minister for Finance in December 1994 I was advised of this position. I examined the papers on the matter and concluded that the contextual framework for the study was deficient.
The sum of the considerations, particularly the role of the credit unions who are now a major player in the financial sector for a large number of our people, and the ongoing role of An Post, which reaches out to an enormous number of people who would otherwise have no connection with the banking sector, was not in any way seriously addressed.
The financial sector in general in Ireland is currently going through a period of change. The demarcation line between banks and building societies is becoming blurred. Competition is increasing, putting pressure on costs. Together with advancing technology, this will require the sector to commit large sums to investment. In recent times An Post has made huge advances in retail services. It has also invested heavily in information technology and the automation of its counter services. The credit unions have also made huge strides in the past few years, including the extensive introduction of information technology systems and major expansion of its community-based branch network.
These major and ongoing changes in the nature of the market in personal banking services were given insufficient weight in the proposals presented to me when I took over the portfolio. For the most part, consideration was limited solely to the commercial banks within the State sector. I was therefore, disappointed that matters had not proceeded further and that the broader framework had not been sufficiently addressed. When I took over the portfolio a major amount of work remained to be completed before any serious consideration of the available options could commence. To this end, I met a wide range of interested parties, including representatives of the boards and staff of all the State banks and senior management in those banks which have expressed an interest in participating in any proposed restructuring of the various institutions.
Throughout the life of this Government, the issue of the future structure of the State banking sector, including TSB Bank, has been under continuous consideration. The Government wishes to facilitate the State banks so that they can maximise their impact on economic development as well as their own business success. I am happy to say that all banks, including TSB, ICC and ACC, are reporting record profits and performance.
The wider role of An Post and the credit unions was also considered in this context. The options for restructuring the State banks continue to be examined by myself and a number of Government colleagues with a view to identifying the most effective solution having regard to the nature of the individual institutions, their particular customer markets, the needs of the whole community in its broadest sense and most importantly development in the EU.
I appreciate that this matter has been under consideration for some time. However the issue of how one might best restructure the banks in order to achieve our objective in relation to the creation of a vibrant and competitive banking market is a complex one.
Also, if the matters I referred to earlier had been taken on board when the initial consideration was taking place, we might be further down the road at this stage. I know that the need for detailed consideration is understood and appreciated by all those involved and I am assured that they are continuing to compete profitably in their chosen marketplace taking full advantage of the opportunities presented by the current economic climate.
It would be wrong of me at this stage to make detailed statements about what may or may not happen until the matter has been resolved by Government. Nor am I prepared to comment on media speculation on what may or may not transpire in relation to the restructuring of the State banks. However, I recognise that this process has been taking place for some time. I am very keenly aware of the need to ensure that employees and management in the institutions concerned should not be adversely affected by uncertainty regarding the eventual outcome.
This is why I have been available at all times to those most closely involved and have had numerous meetings with all the participants. My door has always been, and continues to be, open to them.
This Government would, rightly, be attacked as irresponsible if it abused its position in the financial sector in any way. Therefore, I have approached this issue in a careful and constructive way. It would be remiss of me not to take into account all the possible scenarios before arriving at a recommendation which can be put to the Government. However, the Government is very much at one on the overall objective, to arrive at the solution which best addresses the interests of all.
The Government is fully committed to the creation of a strong and vibrant banking market. The issue of how to achieve this is complex and difficult. I refuse to be rushed into recommending a particular solution to it. Getting it right must be the priority.
