Michael Creed
Question:30 Mr. Creed asked the Minister for Finance the Government's intention in relation to the development of a third banking force; and the future he envisages for TSB, ACC and ICC. [13501/98]
Other Questions. - State Banking Sector.
Liz McManus
Question:72 Ms McManus asked the Minister for Finance the Government's proposals for the future of the ICC and ACC banks. [13574/98]
Derek McDowell
Question:104 Mr. McDowell asked the Minister for Finance if he will make a statement in relation to recent meetings with the staff and management in ACC and ICC. [13703/98]
I propose to take Questions Nos. 30, 72 and 104 together.
In relation to the third banking force, my predecessor stated, in reply to a question from Deputy Callely on 1 May 1997 that much progress had been made over the previous few years in opening up the banking market, in reducing barriers and in creating competition generally. In this, he specifically mentioned the impact of the Consumer Credit Act, 1995, the Competition (Amendment) Act, 1996, the Central Bank Act, 1997, and the Credit Union Bill which has been enacted since then. I referred generally to such developments and to those at EU level in a reply to questions on 28 April 1998. At that time, I said that all these developments meant that "the State's policy in relation to banking no longer requires it to be directly involved in the sector in an ownership capacity".
Looking at the future of ACC and ICC Banks, I added that "given the impact which EMU will have in terms of increasing competition within the sector, the status quo with regard to State ownership is not an option for ACC and ICC Banks in the long-term”. It was against this background that the Government authorised me to enter into discussions with the boards, managements and staff of both banks regarding the future of the banks, including, in principle, the option of disposing of up to 100 per cent of the State's interest in the banks.
On foot of this Government authorisation, I had separate discussions with the boards, managements and staff representatives of both banks in December last and following receipt of submissions setting out their individual views, I held further separate meetings with them on 20 May last. At these meetings, I again emphasised the position that the State's policy in relation to banking no longer requires it to be directly involved in the sector in an ownership capacity and that any process for the disposal of any or all of the State's interest in the banks would have to be open, transparent and non-discriminatory — i.e. that clear and objective criteria for selecting a potential purchaser or partner would have to be established and abided by.
The meetings provided a welcome opportunity for all participants to engage in a very useful and constructive exchange of views and the positions discussed are being developed in ongoing contacts with officials from my Department. In view of the continuing nature of these contacts, it would not be appropriate for me to disclose any further details of the discussions at this time.
As regards the TSB, I can only repeat what I have already told this House, namely, that under the Trustee Savings Banks Act, 1989, neither I, as Minister for Finance, nor the Government has the power to initiate any change in the status of TSB Bank. As Minister I can only respond to a proposal from the trustees who have the sole power of initiative in this matter. I have no current proposal from the trustees.
I thank the Minister for his comprehensive reply. I am sure he would agree it is time that certainty and finality was brought to the debate about the future of a third banking force, particularly the three banks under scrutiny, the TSB, ACC and the ICC. What are the Minister's views on a possible merger between ACC and the ICC? Is he aware of any prospective partner — either an existing banking operator or an outside party — who may be interested in acquiring ACC or ICC?
I would like to be in a position to bring this matter to a conclusion. However, my predecessor, Deputy Quinn was also of that opinion and he was unable to do so. His predecessor, the Taoiseach, initiated this matter and was also unable to bring it to a conclusion. I hope to be able to do so. We have moved considerably from the idea of a third banking force. That idea was mooted in 1992, 1993 and 1994, but the issue is no longer on the agenda in the way it was at that time.
The TSB must be considered somewhat differently. I have no direct control or power of initiative over that organisation. The TSB Act, 1989, is an unusual hybrid. I am aware of no other Act which sets up an institution such as this, but there must have been very good reasons for so doing. Any powers of initiative relating to the bank must come from the trustees of the TSB. If, however, the TSB puts forward proposals I have power of veto. Furthermore, if funds accrue from the disposal of TSB they would fall to the Exchequer, but I cannot initiate proposals in that regard. The proposals on the table previously were put forward by TSB. The trustees very jealously guard their rights in that matter.
I have direct ownership over ACC and ICC on behalf of the State. I hope to move forward the proposals on those two banks as quickly as possible. If the Trustee Savings Bank becomes part of the equation and if the regular trustees of the TSB put forward proposals I will deal with them. I had meetings in December with the board, staff and management to progress matters. As a result of those meetings the various groupings furthered their proposals, but it took time for some groups to be in a position to forward those proposals. In the past month I have had further meetings with the boards of ACC and ICC as well as staff representatives. Discussions are ongoing between my officials and those institutions and I hope progress will be made. I do not like setting a deadline because previous Ministers for Finance who set deadlines were unable to meet them.
Is the Minister in favour of a merger between ACC and ICC? Is he aware of any suitors, existing operators in the Irish banking market or outside this country who are interested in acquiring either bank? I accept the point about the TSB having autonomy regarding its future. Has it indicated a preference as to where its future lies?
I am not aware of any proposal for a merger between ACC and ICC. In recent years there have been various expressions of interest from institutions inside and outside the State in becoming partners or entering arrangements with ACC and ICC. The Government has authorised me to ensure the status quo in terms of those institutions is no longer an option and to dispose of up to 100 per cent of ACC and ICC. I can move between those two broad parameters and that is the area in which negotiations have been taking place between myself and the boards of management of ACC and ICC.
In view of the revelations of recent months, is the Minister glad TSB was not acquired by National Irish Bank? The Minister's colleague reported yesterday in an interim report that there seems to be a prima facie case for sending files to the DPP. In view of the revelations of 53,000 illegal accounts in Allied Irish Banks and major allegations of gross overcharging, thieving and stealing by National Irish Bank——
A question, please.
Is it time to revise the consensus that there should be no State involvement in banking? Surely it was never more necessary to have a third banking force — for example, involving ACC, ICC and TSB — which would be a centre of probity and excellence, a banking system of integrity. Is it not necessary for the Minister to reconsider the matter in view of what we learned in the past six to eight months?
I suggest the Deputy should first have discussions with his party leader, Deputy Quinn who, as Minister for Finance, believed matters in the banking world had progressed.
We operated a policy of partnership Government.
I am talking about the time when Deputy Quinn was in Government, not with Fianna Fáil, but with the Deputy's friends on his left. In the banking world it is time to move on. There is no need for the State to be involved in the banking sector. I said that on many occasions and I repeat it today. In my meetings last December with ACC and ICC I said that the status quo was not an option but that everything else could be discussed. The process involving the boards of management of those institutions and myself is an inclusive one. I would like to think that in the negotiations, the people on the other side believe that I am open to all ideas except that the status quo is an option. Outside that, anything is possible, including the sale or disposal of up to 100 per cent of either or both institutions.
The Minister indicated that the status quo is not an option for the ICC or ACC, and I accept that. The status quo is not an option for the TSB. A bank with less than 5 per cent of market share must consider its future. Has the Minister met the management of TSB? Notwithstanding the autonomy of that bank with regard to its future direction, has it indicated whether it considers the status quo to be satisfactory, given that at one stage it was hot in pursuit of National Irish Bank? Has TSB indicated any preference as to where its future lies?
I made clear to the TSB and the House that I will not waste my time encouraging TSB. The trustees of that institution have taken their own course at all times, as previous Ministers found. If TSB put forward a proposition I would gladly consider it, but it is a matter solely for the trustees of that institution to consider its future. Deputy Creed expressed his view on matters that should be considered, but TSB brought forward its proposals some years ago.
Has TSB given an indication as to its future?
I met management of TSB since becoming Minister for Finance and I told them the same as I am telling the Deputy, that it is a matter solely for the trustees to decide the direction the bank will take. That is not my remit and the bank would not take kindly to my making suggestions to it, as previous Ministers found out.