I call on the Minister to move that the Bill be recommitted. The time limits on speeches are as provided by Order of the House this morning.
ICC Bank Bill, 1999: Motion.
Acting Chairman
I move:
That Dáil Éireann, pursuant to Standing Order 120 of the Standing Orders Relative to Public Business, directs that the ICC Bank Bill, 1999, in whole be recommitted to a Committee of the whole House.
Acting Chairman
Is that agreed?
On a point of order, with all due respect to the Minister of State, there have been very important developments with regard to ICC over the past four or five days. I am sure the Minister of State, Deputy Treacy, can handle the matter very competently but it is extraordinary that there is no Minister from the Department of Finance present to answer what has happened in recent days.
Acting Chairman
The Chair has no responsibility in that matter.
We co-operated with the Minister for Finance all through this debate and more or less accepted every proposal put forward when the bank was about to be sold to facilitate him to bring the legislation through before the recess. There should be a Minister from the Department of Finance present. I know the Minister of State, Deputy Treacy, is a very effective Minister but this is not his brief. It is not sufficient that a Minister who is not familiar with the portfolio would be here to answer questions.
Acting Chairman
Unfortunately the Chair has no control over that. The point is taken but the Chair cannot control who stands in for a Minister.
I am reluctant to have a recommital if the new Committee Stage is not to be taken by the Minister or Minister of State for Finance. I presume the Chair will put the question.
Acting Chairman
I must put the question.
I suggest the Chair puts it now because any argument the Minister of State, Deputy Treacy, may make will not change my view on this. If someone from the Department of Finance is not here to deal with this we will vote against it.
Perhaps I can respond and help out the House.
Acting Chairman
I understand the Minister has a right to speak on the motion and should be permitted to do so.
I am disappointed to hear that my presence is causing a difficulty.
It is not the presence of the Minister of State but the absence of his colleagues that is causing the difficulty.
I served for two terms as Minister of State at the Department of Finance. I am Minister of State with responsibility for commerce with certain responsibilities in the banking area. I have been asked to attend to this business. One of my colleagues in the Department of Finance is in the United States on Government business and the other Minister is tied up in other Government business. It is a matter of collective responsibility that we discharge our obligations and I am here to do that.
The Government decided on 27 July 1998 to dispose of the State's interest in ICC Bank plc as there is no longer any significant strategic or policy justification for continuing direct State involvement in the banking sector.
Following public advertisement, up to ten banks expressed an initial interest in acquiring the bank but only three firm indications of interest were received on the closing date of 23 August. Having reviewed these tenders, it was decided that all three should enter into stage two of the sale process where they would be permitted to carry out due diligence on ICC.
One of these banks, National Australia Bank, withdrew from the process shortly thereafter. The two remaining banks undertook a preliminary due diligence exercise on ICC and so availed of the opportunity to meet key management and union officials. One of these parties, Irish Intercontinental Bank, then withdrew at a late stage and a single final bid from Bank of Ireland was received by the deadline of 19 October last. Its bid was substantially less than the top range of the earlier indicative bids.
Following consultations with the board of ICC Bank, the receipt of advice from the financial advisers to the Minister for Finance and a discussion with senior representatives from Bank of Ireland, the Minister for Finance issued a press release confirming that bank as the preferred bidder. This decision was taken in recognition of the fact that a final offer would not be made until Bank of Ireland had completed the final due diligence process. The Minister for Finance informed Bank of Ireland at that stage that he was not happy with the price it put on the table and that he wanted this increased.
Furthermore, the Minister for Finance was conscious that a decision to withdraw ICC Bank from the market without exploring all the possibilities would at that stage not be desirable.
Bank of Ireland made it known to the Minister on Monday that it no longer wished to proceed with the acquisition. It fully acknowledged the strengths of ICC Bank in its specialist market segments but felt that acquiring ICC Bank was not the best way to develop its SME lending business. In the light of this turn of events, the Minister for Finance withdrew ICC Bank from the market.
The Minister and, I am sure, everyone in the House has the utmost confidence in ICC Bank plc. The Minister is indicating his faith in the bank by now providing for the extension of its borrowing requirements in the ICC Bank Bill, 1999. Going forward, it is the intention of the Minister for Finance—
The Minister of State is obviously reading from a prepared script. Is a copy of the script available for Members?
I am reading from the memo available to me on behalf of the Minister.
It is a script.
The Minister of State is reading from a script.
We can get a copy for the Deputies.
What the Minister of State is saying is very interesting and I would be anxious to get a copy of it.
Excellent, Deputy. We will do that.
Acting Chairman
That is being arranged.
It is the intention of the Minister for Finance and the Government to ensure that the bank remains adequately capitalised while it is under State ownership.
The board, management and staff of ICC Bank have co-operated fully with the change process over recent months. The Minister fully appreciates the role they have all played in the process. At all times their focus has been on building the quality and profitability of the bank. The commitment of all the stakeholders of the bank remains undiluted.
The Minister for Finance will now ask the board, its management and staff to consider the options for the future of the bank in the light of current developments and he will then bring further proposals before my colleagues in Government, and this House, in due course.
In the light of the foregoing, the Minister has decided to make the necessary changes in the Bill and recommit it back to Committee Stage.
I have no objection to the presence of the Minister of State at the Department of Enterprise, Trade and Employment but I have serious objections to the absence of one of the Ministers at the Department of Finance to take this Bill. The Opposition has co-operated with all Stages of the Bill to date and despite the current fiasco, where the sale of ICC Bank has collapsed because of the withdrawal of the Bank of Ireland offer, the Minister of State with responsibility for the Bill, Deputy Cullen, should be here to take the Bill. No excuse is acceptable on that issue.
We heard the Minister of State, Deputy Treacy, recite the events again this morning. The original interest by ten institutions was reduced to three formal approaches and, of the three, only one proceeded. We raised this issue with the Minister when the Bill was debated on Second Stage and in Committee. I said it was a risky strategy to proceed when there was only one willing purchaser. I questioned the Minister on how he would arrive at a proper valuation for the company in circumstances where his original position was that the market would decide the value. When, in effect, there is no market and only one willing purchaser, it is difficult to decide the price.
On Committee Stage, the Minister of State, Deputy Cullen, said the price, in effect, had been agreed and that it was merely a question of crossing a "t". He gave us the distinct impression that there were considerations other than price to be finalised. The Administration, of which the Minister of State, Deputy Treacy, is a member, wanted all Stages of the Bill to be passed before Christmas so that the legal framework would be in place to allow the sale to be finalised.
We have been misled in Committee by the Minister of State. It does not appear now that matters had reached their penultimate stage and the Bank of Ireland has simply dropped the issue. I would like to take this opportunity to say that ICC is a very good bank dealing in particular niche markets. It has done much for small business since it was founded in the 1930s and it is important that we should continue to support the bank. It is a difficult time for the management and the employees of the bank because there is no doubt that the incompetence of the Minister for Finance in handling this matter has damaged the bank. When an institution goes up for sale and it is not sold, that inflicts damage on the value of the institution. If the Minister of State put his own house on the market and nobody wanted to buy it, it is worth less the day he takes it off the market than the day it is put up for sale. That is the position here.
This matter was handled badly. We told the Minister he was pursuing a risky strategy and that he was leaving himself open to the decision of one financial institution as to whether ICC Bank would be purchased. He told us there was no problem, everything was wrapped up, Bank of Ireland would buy the bank and there was no risk. Bank of Ireland has now walked and the ICC Bank has been damaged. Part of the restructuring of the bank and the arrangements to make the bank more productive and to introduce flexibility among employees was based on the issue of shares, but now that the bank is not being purchased by Bank of Ireland, there is no possibility that the employees can get shares in the bank and become involved in the necessary arrangements to make the bank ready for the market.
This is a bad day's work. The Opposition co-operated every inch of the way and accepted private briefing on trust all the way through this process, yet we have a situation today where neither of the Ministers in the Department of Finance have come into the House to answer questions on the matter. That is not acceptable.
On the last matter, the Minister of State, Deputy Cullen, took Committee Stage of the Bill only last week and he effectively told us that the matter was done and dusted and, as Deputy Noonan rightly said, all we had to do was cross a "t". We are entitled to know what happened between Wednesday and Friday of last week to completely reverse the position. We were told that everything was done and dusted with the exception of certain non-price matters, and Deputy Noonan and myself were given a private briefing on those. It appears now that quite a number of other matters were not done and dusted and that something went seriously wrong in the last few days of last week. This House is entitled to know what went wrong because, as Deputy Noonan rightly said, the Minister's failure to carry through on his policy has inflicted serious damage on ICC Bank.
I do not want to say anything this morning that will add further to that damage but I want to make two comments in an attempt to be positive. I have always believed that it was possible to retain ICC Bank within the State sector and to give it a specific strategic mandate. For most of its existence it had a strategic mandate to look after the SME sector, and I understand approximately 70% to 75% of its business is still in that sector, but there is no doubt that in the past four or five years, perhaps longer, it has started to diversify into other areas in the expectation of a sale. If the Government decides to retain ICC Bank within the State sector, it should strengthen that strategic mandate and it should clearly indicate to the bank and its board the business it expects it to do. It must have a business plan which makes sense and the Government must decide within a short time when it intends to dispose of the bank or if it intends to retain it within the State sector. We now have the worst of all worlds. The bank is effectively in limbo. It does not know what it is meant to do. It does not know whether it will be sold within a few years or not at all. That position must be clarified soon.
I am not sure I entirely agree with Deputy Noonan on the issue of ESOPs. My understanding is that an ESOP amounting to 14.9% was in prospect and I understand certain aspects of that still had to be negotiated. It seems clear, however, that the 5% element for restructuring had been negotiated and that had been agreed with the ICC group of unions. The Minister should give serious thought now to proceeding with the disposal of that 5%. That has already been done, as the Minister of State will know, in Aer Lingus. As far as I know, it is the only semi-State company that has not been privatised which has a 5% shareholding in the hands of the workforce. It seems there is no reason in principle that should not be extended, not just to ICC Bank but to other semi-State bodies as well. I appreciate the number of workers we are talking about would be much smaller and the possibility of developing an internal market would be more difficult, but the Minister should now give urgent consideration to the prospect of going ahead with a 5% ESOP as soon as possible.
We now see the wisdom of some of the amendments tabled by Deputy Noonan and I last week, which sought to get the Minister to come back to the House and outline the terms of any potential sale before it could proceed. Section 3 which is now being deleted, effectively gave unfettered power to the Minister to sell the ICC to whoever he wanted for whatever price he wanted in whatever circumstances he wanted. There is a lesson in this for the future. These deals are not done and dusted until such time as the money is handed over and the contract is signed. This House should not ever again be asked to take any Minister or Department on trust and give them unfettered power in regard to the disposal of a State asset. I regret the circumstances in which we find ourselves this morning. The ICC workforce will be very sore indeed. Workers have effectively been in limbo for the past seven or eight years and there does not seem to be any end in sight. The primary onus on the Minister now is to give the bank a clear, strategic mandate without delay.
The background note to the Minister's speech is a cause of concern. Paragraph 1 states that the Government decided on 27 July 1998 to dispose of the State's interest in ICC Bank plc as there was no longer any significant strategic or policy justification for continuing direct State involvement in the banking sector. The note further states that ten banks initially expressed an interest in ICC but that there were only three firm indications after the closing date of 23 August. These three banks were permitted to carry out due diligence on the ICC. Having carried out that process, National Australia Bank withdrew. The two remaining banks then undertook preliminary due diligence on the ICC and met key management figures, following which Irish Intercontinental Bank also withdrew. Bank of Ireland was then the only remaining bank. The Minister of State's speech failed to explain why all of these banks withdrew. Deputy Treacy has direct responsibility for science and technology and, thus far, he appears to be looking after his area of responsibility well.
I also have responsibility for commerce. I looked after the Deputy's area well last week.
Acting Chairman
Contributions on this Stage are confined to the spokespersons who may speak for ten minutes each. I made an error in allowing the Deputy to speak.
The Minister for Finance, Deputy McCreevy, and the Minister of State at the Department of Finance, Deputy Cullen, are primarily responsible for this Bill. The Minister is currently attending a meeting of the parliamentary party and the Minister of State is in America. It is a very serious matter than ten banks were initially interested in purchasing ICC; three carried out due diligence and two of those subsequently withdrew from the process and the remaining bank later withdrew also. The Ministers should be in the House to explain why this happened.
I have always been a great supporter of the ICC Bank which I feel does a very important job. It is very worrying for the staff and the public to see that no buyer is available to purchase this State bank. When is it likely that the bank will come back on the market? It should not be offered for sale for at least five years; to do otherwise would be high risk. Capital must be invested in the bank to allow it to go forward from here. This is a disappointing situation.
Acting Chairman
The Chair was remiss in allowing the Deputy to contribute.
It is important that Deputies would have an opportunity to express their views on such a unique situation.
I thank Members, including Deputy Enright, for their contributions. We are all disappointed about this matter but it is not the first time that Governments – not any of which Fianna Fáil was a member – dealt with Bank of Ireland in regard to issues such as this one and made decisions which, in some cases, were reasonably dubious. However, there was not any collapse then and there will not be one now either. The price offer by Bank of Ireland after stage two of the process was substantially less than the indicative price received. Neither the Minister for Finance nor his advisers were satisfied with that price and the Minister clearly indicated that he wished to see an increase on final offer stage, following the completion of the due diligence process. In view of Bank of Ireland's withdrawal, this process will not now be concluded.
How can the Minister of State say the Minister was not satisfied with the price on Friday when we were informed on Wednesday that he was satisfied with it and that the deal was done and dusted?
In my discussions with the Minister, he informed me that he was not satisfied with the price offered. I want to refer to the Dáil record of last week. Deputy Noonan asked:
Is Bank of Ireland committed to its offer, are negotiations on the price still wide open or is it down to the last £500,000?
The Minister of State at the Department of Finance, Deputy Cullen replied:
I understand a number of issues will affect the final price but it is within certain parameters, given certain circumstances. We are fairly close to concluding before Christmas, there is not a big variance in the price range and the parameters of the conclusion will dictate the final price. That is part of the negotiating process.
That was very fair. The Minister clearly stated that the price parameters were known but he did not say that a price had been agreed. We owed it to the ICC to see the process through. There was not any point in stopping the process before the final price offer was known. The Minister insisted that the price would be negotiated upwards.
At the end of the day, ICC has a unique record. Deputy Enright referred to the background note which states that there was not any significant strategic or policy justification for continuing State involvement in the banking sector. That is a serious position. ICC Bank was established by Fianna Fáil in 1933. We are now in a global banking situation and are experiencing huge growth in our economy in which ICC has played a major role. As a leading venture capital bank, it has made a huge contribution to the development of a number of sectors, including the software sector for which I have responsibility.
We must remove any impediments and allow the bank to grow and develop to serve a growing economy. I indicated in my opening remarks that the board, management and staff of the bank will be consulted on this. Deputies McDowell and Noonan referred to the ESOP and that will now be discussed. We will seek to ensure, with renewed vigour, that the ICC Bank will continue to grow and serve this economy. This Bill will allow for an increase in the bank's borrowing position, including almost full shareholder contributions. As far as the Government and public are concerned, the ICC is the jewel in the crown of Irish financial services. We must treat it with due respect and ensure that if it is disposed of, that happens in the right environment, in the right conditions and for the right price, thereby returning to this country's taxpayers their due right for the investment which has been made over the years. I am confident we will get that right in the future but we must be careful about how it is handled. Bank of Ireland did not make the required offer and, consequently, the sale cannot proceed.
Question put.
Tá
|
Ahern, Bertie.Ahern, Dermot.Ahern, Michael.Ahern, Noel.Andrews, David.Ardagh, Seán.Aylward, Liam.Blaney, Harry.Brady, Johnny.Brady, Martin.Brennan, Matt.Brennan, Séamus.Briscoe, Ben.Browne, John (Wexford).Carey, Pat.Collins, Michael.Cooper-Flynn, Beverley.Coughlan, Mary.Cowen, Brian.Daly, Brendan.Davern, Noel.de Valera, Síle.Dempsey, Noel.Dennehy, John.Ellis, John.Fahey, Frank.Fleming, Seán.Flood, Chris.Foley, Denis.Gildea, Thomas.Hanafin, Mary.Harney, Mary.Haughey, Seán.Healy-Rae, Jackie.Jacob, Joe.Keaveney, Cecilia.Kelleher, Billy. |
Kenneally, Brendan.Killeen, Tony.Kirk, Séamus.Kitt, Michael.Kitt, Tom.Lenihan, Brian.Lenihan, Conor.McCreevy, Charlie.McDaid, James.McGennis, Marian.McGuinness, John.Martin, Micheál.Moffatt, Thomas.Moloney, John.Moynihan, Donal.Moynihan, Michael.Ó Cuív, Éamon.O'Dea, Willie.O'Donnell, Liz.O'Donoghue, John.O'Flynn, Noel.O'Keeffe, Batt.O'Keeffe, Ned.O'Kennedy, Michael.O'Malley, Desmond.O'Rourke, Mary.Power, Seán.Roche, Dick.Ryan, Eoin.Smith, Brendan.Smith, Michael.Treacy, Noel.Wade, Eddie.Wallace, Dan.Walsh, Joe.Woods, Michael.Wright, G. V. |
Níl
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Allen, Bernard.Barnes, Monica.Bell, Michael.Belton, Louis.Bradford, Paul.Broughan, Thomas.Browne, John (Carlow-Kilkenny).Bruton, John.Bruton, Richard.Burke, Liam.Burke, Ulick.Carey, Donal.Clune, Deirdre.Connaughton, Paul.Cosgrave, Michael.Coveney, Simon.Crawford, Seymour.Creed, Michael.Currie, Austin.D'Arcy, Michael. |
Deasy, Austin.Deenihan, Jimmy.Durkan, Bernard.Enright, Thomas.Farrelly, John.Ferris, Michael.Finucane, Michael.Fitzgerald, Frances.Flanagan, Charles.Gormley, John.Hayes, Brian.Higgins, Jim.Higgins, Michael.Hogan, Philip.Kenny, Enda.McCormack, Pádraic.McDowell, Derek.McGahon, Brendan.McGinley, Dinny. McGrath, Paul. |
Níl–continued
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McManus, Liz.Mitchell, Gay.Mitchell, Jim.Naughten, Denis.Neville, Dan.Noonan, Michael.O'Shea, Brian.O'Sullivan, Jan.Perry, John.Quinn, Ruairí.Rabbitte, Pat.Ring, Michael. |
Ryan, Seán.Sargent, Trevor.Shatter, Alan.Sheehan, Patrick.Shortall, Róisín.Spring, Dick.Stagg, Emmet.Stanton, David.Timmins, Billy.Upton, Mary.Wall, Jack.Yates, Ivan. |
Tellers: Tá, Deputies S. Brennan and Power; Níl, Deputies Sheehan and Stagg.
Question declared carried.