Banking Sector: Statements

I am sharing time with the Minister of State, Deputy Fleming. I welcome the opportunity to make a statement on banking matters. This debate is both timely and needed because in the past fortnight, there have been three major announcements from our banks that have major consequences for our citizens and speak to the challenges that the banking industry, along with the country in general, is facing in the midst of battling this pandemic. I refer to NatWest’s announcement of the phased closure of Ulster Bank and the announcement by Bank of Ireland to close many of its branches later this year. In addition, Allied Irish Banks announced a significant transaction that is important to the Irish stockbroking community and its business model. I will say a word about all three announcements.

The NatWest and Bank of Ireland decisions are deeply regrettable for their customers and staff and the wider economy. Ulster Bank has a long history in Irish banking and it was a very sad day that such a point was reached. Nonetheless, these are all commercial decisions being made by the boards and management of private companies and reflect the wider challenges the banking sector is facing, not only in Ireland but also internationally.

Covid-19 has obviously posed many significant challenges for our society and economy, and many households, families and small businesses have been especially affected. The Government fully recognises the financial and other difficulties the pandemic has caused for many of our citizens and has put in place a range of important and necessary supports for households and businesses. The banking sector has taken action but there is a continuing need for it to be sensitive in dealing with customers and to show flexibility at a time of such challenge. My colleague, the Minister of State, Deputy Fleming, will address the challenges of Covid-19 in more detail.

I will now address some of the specific challenges faced by banks. Low, indeed negative, interest rates have depressed their revenues. They are under pressure to make large investments in technological change and face new competition from non-banks. Meanwhile, they are trying to reduce costs to improve returns, as capital requirements are a multiple of what they were ten to 15 years ago in order to make the banking system safer and more robust. This is the reality and it is as important to acknowledge this as it is to acknowledge that we rely on banks for credit and capital, or to acknowledge their roles as employers, or to acknowledge the standards that we expect of them.

Fundamentally, a key aspect of banking concerns taking risk, including in regard to deciding who should and should not receive credit, and at what interest rate, and this is not the business of the State in a modern economy. We should also acknowledge, however, that our experience and that of many other countries has resulted in the entire governance and regulatory landscape being changed in recent years to ensure that banks would never be allowed to wreak such havoc and harm again. Private sector losses should never again be socialised, and we have made the banking system far safer in Ireland. However, there are consequences of the different changes in recent years for all stakeholders, including borrowers, depositors, bank staff and even shareholders. The various parts of the banking business model are all interlinked, so we have to bear in mind that one measure will have knock-on implications elsewhere and cannot be viewed in isolation.

I want to address some general issues regarding banks that have been raised with me recently before dealing with the specific matters of recent days. The question of interest rates, deposit balances and liquidity in general has risen in prominence significantly throughout the banking system in Europe as the ECB has continued to provide additional funds through its asset purchase schemes and long-term refinancing operations. This has been exacerbated by Covid-19, as households continue to stay at home and defer investment decisions. The application of negative deposit rates by the ECB has resulted in European banks incurring a consequent cost on deposit accounts, and Irish banks are no different in this regard. It is important to note that in passing on some of these costs, banks cannot differentiate between customers in different sectors and, therefore, the approach is taken to apply charges based on the size of the deposit balance.

The question of capital levels and how they impact decisions made by banks has also been in the news recently. There has been wide coverage of the rates charged by Irish banks on both mortgage and SME loans, highlighting that they are among the highest in Europe. It is equally critical, however, that this higher level of capital has meant that banks are now safer and not overleveraged and that, unlike at the time of the previous financial crisis, the impact of Covid-19 has not posed questions for the stability of the banking system. It is important, therefore, that banks have a high and more robust level of capital. That is the foundation of a safe financial system.

Nevertheless, this will have certain impacts on other aspects of banking. Credit risk and capital requirements in Ireland are still elevated due to historical loss experience on loans and these higher levels also result in higher credit and capital costs for Irish banks, which in turn affect the interest rate they have to charge on loans. At a wider EU level, the regulatory and supervisory framework for banks has changed significantly. Banks are now subject to more intensive supervisory regimes. They must hold more and better capital and have additional and strong reporting requirements. All of this is aimed at strengthening the resilience of the banking system to build capacity to absorb economic shocks, to weaken the link between sovereign and banks and to reduce the need for future State bailouts.

The Government wants to ensure the banking and financial system will effectively contribute to and support economic growth and employment. However, it also has to be profitable to do this. Profits are important for banks as a source of capital to support loan growth and to allow for investment in business, such as in expensive and needed ICT programmes. They are also important as a source of capital to support losses that inevitability arise in periods of economic stress.

Turning to Ulster Bank, its withdrawal from the market will be phased and take place over a number of years. There will be no immediate change for customers, therefore, with full banking services to continue on all channels for existing and new customers. This has been pointed out clearly to the bank's customers and the general public. As Deputies will be aware, NatWest is in early stage discussions with PTSB and, importantly, other strategic banking counterparties about their potential interest in certain retail and SME assets, liabilities and operations. Also, a memorandum of understanding that has been signed with AIB, regarding certain corporate and commercial loans, signals a potentially important development for the Irish banking sector, as do the negotiations under way between NatWest and PTSB. While these are commercial and independent negotiations, the Government is supportive of trying to bring about an outcome that is good for both AIB and PTSB but, more importantly, for existing Ulster Bank customers and staff and the economy generally.

In regard to the announcement by Bank of Ireland on Monday that it will close 103 branches in Ireland, 15 of which are in the North, it is important to acknowledge that as Minister for Finance, I cannot mandate or overrule the internal decision-making process in any bank, even one in which the State has a shareholding, which in this case is a minority one. Decisions in this regard are a commercial matter and the sole responsibility of the boards and management of the banks, which are run on an independent and commercial basis.

These decisions are further evidence of the impact technology is having on the way customers interact with their banks. Developing mobile communications allows more and more people to transact their business remotely. Banking is only one of many businesses that are now conducting a greater proportion of their business online.

As I did at the start of my speech, I absolutely acknowledge heightened local concerns arising from this decision. I also accept that many people will still need, or want, to carry out their banking activities in person. It is therefore a welcome development that Bank of Ireland is now entering into a new partnership with An Post that will allow personal and business customers to use their local post office for a range of banking services, including cash withdrawal and lodgements. More generally, the bank branch as we know it is undergoing change and is moving towards providing financial advice, with some customers visiting their branches less frequently.

Yesterday’s announcement by AIB that it has reached an agreement to acquire Goodbody stockbrokers is a positive development for three important Irish companies: Goodbody, Fexco and AIB. It is positive for Goodbody because it will continue to have a well-capitalised owner providing opportunities for growth, which will support the wider needs of the Irish economy and businesses. The acquisition also represents an opportunity for AIB to deliver on its ambition to diversify its revenue in the interest rate environment which I described earlier and to broaden its financial offerings in the life, pension, wealth and asset management sectors, in addition to enabling its Irish corporate and business customers to access a greater range of services. Critically for Fexco, which is an important employer in the south west, the proceeds it receives from the transaction will help it to continue to grow and to innovate in the financial services sector.

The standard remuneration arrangements in a stockbroking business are very different from those that pertain in a retail and commercial bank such as AIB and, reflecting this, the bank sought my consent for the continuation of the current arrangements in Goodbody. This has been done in a manner which ring-fences Goodbody from the rest of the AIB Group and ensures ongoing compliance with Government policy on bank remuneration, which remains unchanged. As I stated yesterday, a small number of AIB staff, including from its corporate finance and wealth management business, will transfer to Goodbody in order to maximise synergies between the teams, avoid duplication of activities and facilitate the integration of that business into AIB. There will also be a restriction on Goodbody hiring any person, in the open market or otherwise, with a total package above €50,000 who was an employee of AIB, or any company in the group, at any time within the previous two years. I also welcome the announcement by AIB that it intends to establish a SME equity fund, which will be of assistance to companies wishing to access finance.

Moving to the final development, I note yesterday’s announcement by the Central Bank of Ireland that it has fined and reprimanded Davy stockbrokers for regulatory breaches arising from personal account dealing. As I stated yesterday and again this morning, the behaviour has been detailed by the Central Bank and falls gravely short of the standards of behaviour that are expected of those in a position of financial responsibility. While this is, in the first instance, a very serious regulatory matter between Davy and its regulator, I have called on Davy to respond to the Central Bank’s statement on the outcome of the enforcement action. I note that it has done so this evening and that it has said it deeply regrets "the shortcomings that emerged from the Central Bank of Ireland’s investigation” and has apologised “unreservedly and unequivocally that these failures occurred and that Davy failed to adhere to the high standards expected of the firm both internally and externally”.

Of course, there are many further banking challenges and problems which need to be addressed. With regard to the role of the banking sector in supporting our economy as we recover from Covid, I note that, unlike the situation a decade ago, the impact of Covid-19 on the banks has not called into question the stability of the overall system, which matters deeply for our ability to recover. The banking reforms introduced since the last crisis have, indeed, helped to maintain financial stability. The banks now operate more soundly and are guided by the Central Bank mortgage lending rules, which provide credit on a more prudent basis. They are now of a size that is more in line with the size of our economy and have higher capital levels and more solid financing.

While there are clearly banking challenges and difficulties both for the banks and those who depend upon them and work in them, whom I have acknowledged in my speech this evening, banks are now in a position to meet the challenges of Covid and its effects upon them and, in doing so, to be able to work with their customers to help them meet the real challenges currently before many businesses and households. They are in a position to respond in a flexible and sensitive way at a time when so many are facing great challenges and, in doing so, to put in place the kind of supports the Government's actions have enabled, which will allow for the first steps towards the recovery of our country and economy from the terrible economic harm of the last year.

I thank the Leas-Cheann Comhairle for the opportunity to discuss banking matters here this evening. As the Minister, Deputy Donohoe, has touched on, this debate, like so many others, is now set against the backdrop of Covid-19. Covid-19 is the most significant shock the banking system has faced since the financial crash of over a decade ago. Nevertheless, the banking reforms introduced since the last crisis have helped to maintain financial stability at this difficult time. For example, over recent years, Irish banks have engaged in more prudent lending, including mortgage lending, due to influence of the Central Bank lending rules. They have downsized, are more focused on the Irish market and have more stable sources of funds. They are also more appropriately capitalised for their lending and other activities. Of course, other factors have also been significant in helping to maintain stability. These include the exceptional levels of business and income supports provided by the Government and the monetary policy adopted by the European Central Bank.

While Government supports have played an important role in helping impacted businesses and households, it was also necessary and welcome that the banking industry stepped up early and acted to provide essential support and assistance to its customers. Around this time last year, the Minister for Finance engaged with the Banking and Payments Federation of Ireland, BPFI, to ensure that these necessary supports would be put in place. In response, the BPFI announced a co-ordinated approach by their bank and other members to support customers. The range of supports included payment breaks, initially for three months but later extended to six months. The implementation of this voluntary moratorium by the banking industry in Ireland was an immediate and flexible response to the fast-emerging Covid-19 crisis.

Since then, more than 150,000 payment breaks were approved for household and SME borrowers, including more than 82,000 on mortgages, almost 36,000 for other consumer loans and 32,500 for SME loans. Therefore, a large number of borrowers received important liquidity and cash flow supports during a fast-moving and evolving public health crisis, which helped them to deal with the immediate onset of the Covid-19 crisis. It is also welcome that, as these system-wide Covid-19 payment breaks came to an end, the vast majority of borrowers have been able to resume full loan repayments. Almost 89% of primary home mortgage borrowers returned to full repayments at the end of the payment break and the vast majority of them have done so within the existing loan term. Many borrowers are still impacted by the pandemic and will continue to need help, which we expect to be provided.

Separately, it is positive to note that while the pandemic had an immediate impact on the scale of new lending, the number of approvals has picked back up significantly with the monthly levels of mortgage approvals, both in terms of the number of applications and of value, since September 2020 higher than in any comparable month since such data were first published in 2011.

The CEOs of the main retail banks have confirmed that they are continuing to process mortgage applications and mortgage drawdowns from their customers who were impacted by Covid-19 on a case-by-case basis and that they are taking a fair and balanced approach to such applications. I look forward to hearing contributions from Deputies.

I welcome the opportunity to have this timely debate on banking in this State, which is probably overdue. I have ten minutes and I hope to give some of that time to the Minister to respond. It is unfortunate that we are going through difficult times. I will focus on four issues, all of which have arisen in the past month and which have serious implications for the sector and for consumers, staff and banking policy. I am glad that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has taken up a number of my suggestions, including the issue of capital that our banks have to hold and asking the Central Bank to do a further assessment on the appropriateness of the current situation, but also a number of other issues at which we need to look.

My first concern relates to Ulster Bank and the announcement last month that it will exit the southern market. It is a hammer blow to staff, customers and the banking sector as a whole. Its exit will reduce competition and increase interest rates for consumers, or at least that is the likely direction of travel. The State plays a major role in banking due to its shareholding. In reality, we are regrettably seeing and feeling the aftershocks of the financial crash in 2008 because the reason Ulster Bank is withdrawing from the market is to free up capital that is trapped as a result of that crash. However, in dealing with the aftermath of Ulster Bank's decision, there is an opportunity to create a third force in banking to challenge the duopoly of AIB and Bank of Ireland. Permanent TSB is clearly the bank to take up that mantle. I ask the Minister to update us on his engagements with Permanent TSB and give us his view on its ability to acquire elements of Ulster Bank's loan book. The CEO's statement on "Morning Ireland" today that Permanent TSB is also interested in acquiring some of the branch network will be welcomed by many. Can the Minister update us on any of those discussions? Will he commit to the establishment of a forum on the future of banking, for which we have been calling for quite a while now? It would bring in all the shareholders and external experts to assess the state of our banking sector and the problems it faces and chart a path for its future.

The second issue I want to raise is the disgraceful decision by Bank of Ireland, in the teeth of this pandemic, to close 103 branches across the country. It intends to close 88 branches in the South and 15 in the North, which is more than a third of its branches nationwide. It is the wrong decision at the worst possible time. Bank of Ireland has told us that the services will be available through local An Post branches but the reality is that many of these branches, such as the one in Dungloe in my own constituency, offered a full suite of banking services that will not be offered in a post office. In Britain, the regulator called for banks to pause all branch closures during the pandemic on the grounds that it would hurt vulnerable customers who would be unable to prepare effectively for the transition to online banking, especially given that they cannot visit the branch during public health restrictions. Clearly, Bank of Ireland does not share those concerns. I acknowledge that the Minister cannot direct the bank or control it, but as the largest shareholder in Bank of Ireland, I appeal to him to call on it to reverse its decision, which was made in the middle of a pandemic, and halt it until there is proper consultation. I ask him to make that call today.

I turn to yesterday's announcement that AIB is to acquire 100% of Goodbody stockbrokers for €138 million. It sold it for €24 million and is buying it for €138 million. As the Minister knows, we have passed legislation in this House that subjects bankers' bonuses to a levy, which basically rules bonuses out within the system. The reason for that is that such bonuses contributed to the financial crash by incentivising risks and so on. That levy applies to all banks that were bailed out and, as the Minster knows, AIB was bailed out to the tune of just under €21 billion, with €10 billion of that capital still to be recovered. As the majority shareholder in AIB, with 71% of the shares, the Minister gave his consent to Goodbody to dodge the bankers' bonus levy. A number of AIB staff will transfer to Goodbody, all of whom will now be able to avail of bonuses and the levy will no longer apply. Why did the Minister give his consent to Goodbody to dodge the bankers' bonus levy, despite the fact that it is entirely owned by a bank that is subject to this levy, which is written into our tax law? How will this arrangement comply with that section of our tax law?

My final point relates to Davy stockbrokers. Yesterday the Central Bank fined Davy €4.13 million for a transaction by a number of its employees that breached the market rules for personal gain, which took place between 2014 and 2016. It brings a whole new meaning to the Davy slogan, "It's not just business, it's personal." Well, it was very personal for these 16 employees. Davy then proceeded to mislead the Central Bank in its investigation and it is reported that every member of the committee of senior executives at Davy who signed off on the transaction were members of the private consortium involved. No minutes were taken of this meeting and there was no consultation with compliance. It is also reported across a number of media sources that the current CEO of Davy and other senior executives were among those involved. The Taoiseach said in the Dáil today that yesterday's fine would impact on future behaviour. The Minister's own comments today noted the apology from Davy. Let me make this clear: none of that cuts it. It does not deal with the issue. It is a totally inadequate response that fails to deal with the seriousness of the issue at hand. Corporate fines will not hold a single individual to account. That is why the Central Bank has been calling for a senior executive accountability regime for over three years now. Yet, the legislation still has not been published by the Government. Yesterday's fine and the ongoing revelations underline the urgent need for this legislation but also the lack of priority it is being given by the Government. When will the legislation be published?

Davy's statement this afternoon was nothing more than an apology and it is clear that it has no intention of holding anybody within the organisation to account. Given the lack of individual accountability within that firm, it is clear to me that the NTMA is now left with no other option but to cut ties with Davy stockbrokers. The State cannot permit any entity or individual that puts personal gain above its regulatory requirements to have any involvement in our assets and liabilities. It is regrettable that it has come to this but it is unbelievable that Davy is still not holding its team, at the most senior level, accountable and that we have not seen any resignations. Instead we have an apology for not only frustrating the Central Bank's inquiry about what Davy did but also the breach of trust and regulations. What is the Minister's opinion on the continuing engagement between the NTMA, which holds our money, the taxpayer's money, and Davy, which is unwilling to hold its senior executives and staff accountable for what they have been found to be doing?

I thank Deputy Doherty for raising an array of very important matters. In the time that is available to me I will make a point about each of them. First, he asked about the larger role PTSB may play within Irish banking in the aftermath of Ulster Bank leaving. My Department has engagement with PTSB and if it is commercially viable and makes sense for the shareholder, which is in this case the Irish taxpayer, we would be supportive of transactions taking place that would strengthen the role of AIB and, in particular, PTSB. I am not in a position to answer the questions the Deputy has put regarding what that would mean for the branch network and staff because there are currently negotiations under way on that matter. Ultimately, PTSB will have to be able to conclude those negotiations and then make a recommendation to me, as a shareholder on behalf of the Irish taxpayer. When those negotiations are concluded, I, indirectly, and Permanent TSB will be able to answer the questions Deputy Doherty has raised. I stress the importance of the statement made by NatWest in which it emphasised its willingness to engage with other banks that provide the full array of retail services within the Irish banking sector. I also emphasise my hope that the negotiations that are under way will allow that aim to be met, while also coming up with transactions that are sustainable for the two banks in question.

I recognise the concern Bank of Ireland's decision to close several branches across the country is causing in many communities at the moment. In emphasising my concern for how this has affected many, I must make clear that I do not have a role in this and cannot mandate the bank on what is a commercial decision. There is now an opportunity for An Post to investigate what services it can provide to meet the community needs that Deputy Doherty has described. The Minister of State, Deputy Fleming, has also spoken about the opportunity for the credit union movement in meeting some of these needs.

Sinn Féin has indicated that its second speaker has five minutes. I am not sure if Sinn Féin wants to give the Minister more time. Deputy Mairéad Farrell is to speak, and we are eating into her time. It is agreed to let the Minister continue.

The reason I gave my agreement for the Goodbody transaction to take place is that I believe the sale by Fexco of Goodbody is good for a really important company in our country, particularly a very large employer which is facing many challenges at the moment. I believe it can help AIB respond to the challenges I have referred to. I believe a stable owner for Goodbody will be important for the transactions and the work it can do within our economy. For me, it is about jobs in three Irish companies. It is about how we can support three Irish businesses with all the challenges and difficulties we are aware of.

I will say in the Dáil what I have said publicly about Davy. The behaviour that the Central Bank detailed absolutely falls short of the standards that I expect and that the regulator clearly expects. I know Davy has made a statement on the matter. I know it is considering further actions it may take on the matter. At this point I have nothing further to say on it, apart from again echoing everything the Central Bank as stated on the matter.

We heard the very difficult news this week that Bank of Ireland is shutting 103 of its branches, North and South. Bank of Ireland has used the pandemic as a pretext to close branches and to cut costs. Its concern seems to be for its bottom line, with loyal customers and citizens of the State being forgotten. The State has been a significant shareholder in Bank of Ireland ever since we bailed it out. Let us recall that Bank of Ireland received €4.7 billion from the Irish State, including over €1 billion in preference shares that the State had required as part of its recapitalisation of the bank. The National Pensions Reserve Fund was raided at the time. Today it will be many pensioners, older people and those who are not as digitally literate who will suffer from these branch closures. Given the State's significant shareholding in Bank of Ireland, what role does the Minister have? What will he do to protect these vulnerable people? It seems that once again rural areas are being hit by a decimation of services and the Government must finally stand up for those areas.

We saw more shocking news this week with what is happening with Davy's failure to hold its board accountable. What has been reported in the media seems to be blatant corporate malfeasance for which the Central Bank has imposed a fine of €4.1 million. History has told us that fines rarely work to change the behaviour of large financial institutions. It has been reported in the media that 16 Davy staff members including top level people - the media have even mentioned the current CEO - have hoodwinked their clients and deceived their own compliance department. It has been reported that when engaging with the Central Bank it gave vague and misleading details and wilfully withheld information that would have disclosed the full extent of the wrongdoing.

Under the Companies Act 2014, directors are required to act in good faith, to act honestly and responsibly, and to avoid conflicts of interest. Penalties for breaches of the Companies Act include criminal and civil sanctions. This morning on "Morning Ireland", the Minister called on Davy to make a public statement on the matter. Was that it? That is extremely weak based on what has been reported. Why bother? Is the Minister asking that so we can be told the actions were regrettable, they do not meet the standards of best practice and they will do better in the future? That is simply not good enough. We have heard all that guff before. We need to show the public we are serious about this. It is high time we introduced the senior executive accountability regime that has long been promised but never delivered.

While I know we have limited time, I am pleased the Dáil has acceded to my request to hold a debate on general banking issues. Originally this debate was to discuss Ulster Bank, but, of course, things are very fast-moving in the financial services industry and we need to cover many issues this evening.

It has been a wretched ten days for banking and financial services in Ireland. Ulster Bank is going. I support moves to scope out the concept of a third banking force and the potential role that Permanent TSB may play in that. As we know Bank of Ireland has taken the knife to 88 branches across the country. Yesterday, as we know, the Central Bank slapped a €4.13 million fine on Davy as a result of the behaviour of 16 of its staff, involving egregious breaches of conduct. In other countries, the law views this kind of behaviour as corruption. In Ireland it is merely a regulatory breach.

On the day the fine was issued for the costliest nixer in Irish history, the State in the guise of AIB bought a stockbroking firm for €138 million, having sold it for just over €20 million in 2014. It will not be lost on the public that the same bank that was given the green light to buy a stockbroking firm yesterday with added bonuses for good measure also announced the closure of five of its own branches. This frenzy of bank branch closures shows that relationship banking in this country is dying for the less well-off ordinary citizen, but for high-net-worth individuals the red carpet is being rolled out by AIB and its stockbroking partners now in the guise of Goodbody.

A Labour Party councillor in Donegal, Martin Farren, called me earlier this week and he is campaigning to save the Moville branch of Bank of Ireland. As the Minister will know, Moville is a lovely tourist town. Councillor Farren tells me this is the last bank branch in Moville and in the entire Republic of Ireland side of the Foyle. The nearest bank branch is more than 10 miles away. He has told me the bank will not be operating an ATM on the site. It has said that where it is closing branches, it will continue to operate ATMs, but this is not the case in Moville.

Does the Minister agree with Councillor Farren and me that there should be a pause on all bank branch closures? In his earlier contribution, the Minister stated he does not have a function to allow him to do that. However, let me ask him this question. Should the Central Bank code of practice be changed and brought in line with UK regulatory provisions, for example, to allow for impact assessments and 12-month consultation periods where bank branch closures are being considered?

Regarding Davy, companies do not make decisions; people do. Individuals need to be held accountable for actions which resulted in the imposition of the €4.13 million fine yesterday. I know Davy issued a statement earlier this evening, but based on that statement it seems it is prepared to brazen this out. It is circling the wagons. The section of law used by the Central Bank to investigate this transaction allows for fines to be imposed on individual wrongdoers. Should this be the next step for the Central Bank? As far as the Minister is aware, is any material related to potential fraud, deception or loss being caused being forwarded by the Central Bank to An Garda Síochána? To the best of the Minister's knowledge, is the Central Bank engaged in any similar investigations in other stockbroking or wealth management firms operating in this country?

Time and again I have mentioned the need for a senior executive accountability regime. It is long overdue to encourage and promote better behaviour. In his earlier contribution, the Minister articulated that he plans to introduce the heads of a Bill very shortly. How soon will that be? We have been waiting for a long time.

Regarding the concept of a forum on banking, I hope the Minister will agree with me and with the Financial Services Union that the future of banking in this country and the design of policy should not merely be left up to politicians and senior bankers. We need to consider fully and holistically the function of banking in our society. I back calls for a forum on banking so that we can have that comprehensive understanding and review of the role that banking should be playing in this country, how that should be designed, and how that can be done ethically and in the way that serves the best interests of our economy and society.

Would that be a concept the Minister would be prepared to consider further?

I thank Deputy Nash for the questions. I will deal with each of them in turn, starting with the substantive questions about the investigation the Central Bank has carried out. The Deputy asked me what evidence it has and if I am aware if it is carrying out investigations of other companies. He knows that I cannot comment on the nature of investigations carried out by an independent regulator. This is the very point of having a regulator to do this work. In his concluding remarks, the Deputy pointed out the danger of politicians being involved in the design of banking systems. There is equal danger in them having the information to be able to answer the questions the Deputy put to me. These are matters for answer by the Central Bank, which I understand will appear before the Oireachtas finance committee next week. I am sure the officials will do their best to answer the questions, but I know also they will be bound by law in terms of their responsibilities.

On the question regarding the closure of the Bank of Ireland branch in Moville, I refer the Deputy to the answer I gave to Deputy Doherty. My own local branch in Phibsborough is closing and I am aware of what that means for my own local community. For them, and in relation to the issue raised by Deputy Nash and which other Deputies may raise, I do not have a role in those decisions. Deputy Nash concluded saying that politicians should not play a role in the design of banking systems. That has consequences, which is one of the reasons I am not involved in those decisions. I have to recognise the commercial decisions that are being made while equally being clear about the impacts they have on communities. I believe the role of An Post can be important in responding to that.

We move to a Government slot, which is being shared by three Deputies, beginning with Deputy McGuinness.

I am extremely disappointed with the contributions of the Minister, Deputy Donohoe, and the Minister of State, Deputy Fleming. There has been no change in the policy of this Government towards the banks, the type of banks we want in our society and the issues raised here this evening by various Deputies. If we are to have a different landscape in terms of banking, then there must be discussion and firm debate on the issue. I asked the Taoiseach, the Fianna Fáil parliamentary party and Government Whip and I wrote to the Ceann Comhairle seeking a wide ranging debate on the issues such that questions could be addressed.

The Central Bank will appear before the finance committee next week and will tell us that, according to legislation, they cannot answer questions in regard to Davy. Will the Minister change that legislation and allow the Central Bank, following its investigation and imposition of a fine, to then issue a statement setting out why the fine was imposed, who was involved and what action is being taken? The public need to know if this matter is to be sent to the Garda for further investigation.

Ulster Bank was the tip of the iceberg. It closed 88 branches and did not discuss with its workforce what the consequences of that would be. The bank refused to engage with employees and with the Oireachtas committee and went ahead with what it was going to do anyway. Likewise, Bank of Ireland, under the cover of Covid, has announced the closure of some of its branches. We will discuss those closures with that bank at a later date, but I believe that Covid was used as a cover by Bank of Ireland. At the same time it announced the closures it also announced a partnership with the post office network. I have discussed that partnership with the post office network, all 890 of them. The figure they gave us for the value of the transactions would be roughly €1,000 to each of the 890 postmasters. This is not good enough. It is a way for Bank of Ireland to spin its way out of the closure of the branches.

I would like to see a change of policy and the putting in place of community-public banking. I would like to see the Government encourage that and make it possible through the post office network and the credit unions. I ask the Minister to explore that, as the finance committee did. Sparkassen Bank and Kiwibank are available to provide advice and help set up that type of banking system, to ensure it is at community level and to ensure that people and communities benefit from the profits rather than the profits going to shareholders like the big banks.

We are now in a duopoly. The Minister, in his contribution this evening, did not mention the vulture funds and the terrible destruction they have brought to Irish society, family businesses and farms. I know he will quote that the protections travel with the loan, but that is not the experience of those trying to save their livelihoods in the context of these banks. The receivers are acting almost without law and taking possession of properties. The owners of those properties lose contact with them and they do what they like. At the end of the day, they are accountable to nobody. Will the Minister, with the Tánaiste, bring about a situation where the receivers in this country are regulated and made to report to someone? Will he engage with Allied Irish Bank on the tied agents issue and EBS? Government is the biggest shareholder in that bank, which is blackguarding a whole group of people, as they are some of their customers? This has gone on with no resolution in sight. Will the Minister ask Davy to do more than apologise? It only apologised today on the Minister's intervention. A fine of €4.1 million was imposed. We need to know about it and the background to the sale and repurchase of the stockbrokers that is now being purchased by AIB.

Two recent decisions by NatWest and Bank of Ireland will have serious repercussions for so many rural communities and some urban communities as well. Over the past couple of months I have engaged with the Minister by way of parliamentary question, conversation and Dáil debates in regard to my concerns about the NatWest announcement of a strategic review of its operations in our State. Its decision to exit the Irish market will impact severely, as we know, on staff, customers and communities. The Border region has had a strong presence of Ulster Bank over many years. The recent decision will result in the closure of branches in Ballyconnell, Ballyjamesduff and Cavan town and in Monaghan town, which are four branches in my constituency. This followed on from the bank exiting towns such as Belturbet, Killeshandra, Kilnaleck, Swanlinbar, Clones and Castleblyaney in 2013-2014 and Arvagh and Cootehill in 2017. This shows the dramatic change in the landscape of Ulster Bank services over the past number of years. In a number of months, there will be no branches or presence in many of those towns. It is a dramatic change, and for the worse, unfortunately.

The announcement by the Bank of Ireland on Monday last will again result in the closure of branches in my constituency in Arvagh, Cootehill, Kingscourt, Clones and Castleblayney. This is very regrettable for staff, customers and local communities. It is deplorable that the Bank of Ireland is making this decision during a pandemic when, of necessity, there has been a dramatic reduction in footfall in our towns and villages and, understandably, fewer people attending branches owing to public health guidelines. This means a further dramatic reduction in banking competition and shows no regard for staff and local communities that have been loyal to the Bank of Ireland over many decades.

The towns I mentioned where Bank of Ireland is closing branches, namely, Arvagh, Cootehill, Kingscourt, Clones and Castleblayney, are, fortunately, all good market towns with substantial employment. In some of those towns, however, there will be no banking facility whatsoever. When the Covid crisis is over, we all hope there will be an opportunity to create more jobs in rural Ireland through people being afforded the opportunity to work from home and from digital hubs. However, at the same time that we are encouraging private employers and the public service to give opportunities for employment in smaller towns and villages in rural Ireland, major institutions are exiting those towns and villages and depriving communities of a necessary banking service. The Financial Services Union made the very strong point that the Bank of Ireland decision will result in the removal of vital services from elderly people, those with no Internet access, those who lack confidence in doing business online, and people with literacy and numeracy problems. The decision is a hammer blow to staff, customers and communities. Once again, it is vulnerable people who will suffer from it.

I welcome the opportunity to speak in this debate. It has been a bad ten days or so for the banking sector in Ireland. First we had the NatWest announcement that it would be closing its Ulster Bank branches, which will have a huge impact in my county of Clare where there are branches in Shannon town and in the county town of Ennis. Many of the branches are in buildings in iconic locations. The same applies to some of the Bank of Ireland branches that are to be closed, several of which have been there for well over 100 years. Bank of Ireland's announcement that it is closing 103 branches is another huge blow to my county and a strike on rural Ireland.

It is a devastating and, I would say, ageist blow, because the people most impacted by the closure of banks in Tulla, Miltown Malbay and Kilkee are the elderly and others who may not be adept at pushing their thumb across a small screen and doing online banking. It will impact those who do not use Stripe, PayPal or other online transfer services. When things were opened up somewhat last year, I visited the homes of people in rural areas in my constituency who take out wads of cash. They go to their local bank and make a withdrawal of cash to carry them through the next three or four months. It is not a safe or sustainable way to do things and it is not the way banking is supposed to be. The banks are turning their backs on their most loyal customers in rural Ireland. Worse than that, Bank of Ireland is not giving a commitment to retain ATM services in Tulla, Miltown Malbay and Kilkee. Where will people go to take out money? If they are lucky, there might be a Spar shop that has an ATM down the back beside the eggs and bread. The bank is pulling out entirely and showing no loyalty whatsoever.

I want to deal with the idea that An Post will offer some type of outpost banking facility and that this will be a panacea or magic wand for that company. There may be Bank of Ireland stickers around the Perspex screens and hatches but a postmaster told me that, at best, this will give approximately €1,500 to €1,800 per annum in additional income for post offices. It is not a panacea for the ailing post office network. My colleague, Deputy McGuinness, made the point that we need to work towards having a third type of banking system. We have pillar banks and credit unions but we also need community banking. We have seen how well the Sparkasse model of community banking in Germany and the Kiwibank in New Zealand have worked. The profits in those banks go back into the community. It is a fabulous model and one the Government must pursue.

I implore that everything be done to help the communities affected by the bank closures. The argument will be made that these are commercial decisions taken by commercial banks but anything that can be done should be done. This is a strike on rural Ireland and the banks are using the Covid crisis as an excuse to draw the shutters on their branches.

I welcome the opportunity to speak in this important debate, which is happening at a very opportune time. I wish to raise several points that relate particularly to businesses. The recent announcements by Ulster Bank and Bank of Ireland are of very significant concern for people who hold individual personal bank accounts with those banks. However, the situation for SMEs and family-run businesses is particularly concerning. Ulster Bank has a €5 billion business and a substantial corporate loan book that is made up of a significant portion of SME loans. In fact, those loans account for some 20% of the Irish SME market. That the loan book is so large is a testament to the work Ulster Bank has done over the years to make itself accessible and supportive and to encourage small business. This was achieved in large part by the fact that its branches were located on the high street and other accessible locations.

I have heard a lot of talk about the possibility of Permanent TSB or AIB purchasing Ulster Bank's loan book. Ensuring the book stays within the remit of the pillar banks is of paramount importance but any such acquisition cannot result in less favourable circumstances for small to medium enterprises and family-run businesses. Quite frankly, they just could not take that outcome. Other banks with smaller SME loan books than Ulster Bank need to up their game. There has been speculation for months that Cerberus, one of the most aggressive vulture funds in this State, is circling Ulster Bank's entire €20.5 billion loan book. That sale must be avoided at all costs. Loans and mortgages with Ulster Bank cannot be allowed to be sold to any vulture fund. Such an eventuality would make a very bad situation much worse. As my colleague, an Teachta Doherty has said, the current situation gives an opportunity to create a third force in our banking sector to compete against what would otherwise be a highly concentrated market, with the risk of higher interest rates and weaker credit availability that would involve.

Behind the conversation about loan books and so forth, there are 2,400 workers across 88 branches who have been left in a perilous situation. Everything must be done to protect their jobs. Any sale of the Ulster Bank loan book to another bank must prioritise the protection of those workers and their jobs. The key role that Ulster Bank plays in our communities, providing jobs to thousands of staff and access to mortgages, loans and credit to people and businesses, cannot be underestimated. The State has a duty to do all it can to protect those jobs and the communities in which they are located. The preference of Ulster Bank for discussions of sale with parties that can provide full banking services is welcome and should be done with the aim of retaining the jobs, experience and expertise of the Ulster Bank staff who have been disrespected throughout this entire process.

The news that Ulster Bank was leaving the Irish market after 160 years is not the only bad news for banking in this State and for workers and communities throughout the country. The announcement by Bank of Ireland that it is to close more than a third of its branches in the South and more than half in the North from September is the wrong decision and it is happening at the worst possible time. Research has found that bank branch closures reduce SME lending growth by 63% in impacted areas, rising to 104% when it is the last branch in the area. Many of the closures affect whole areas, not just the place in which the branch was located. The damage caused by such closures is multiplied by neighbouring banks also being closed. I know from speaking to my colleague, an Teachta Funchion, that the closure of two branches that are scarcely 10 km apart, one in Borris in County Carlow and the other in Graiguenamanagh in County Kilkenny, will, in effect, wipe out Bank of Ireland banking for the whole of south Carlow. On the Kilkenny side, the closure of branches in Graiguenamanagh and Thomastown will wipe out Bank of Ireland banking for a whole swathe of that county. It is the same right across the board. These closures are targeting entire areas and caught in the crossfire are customers, small to medium enterprises, family-run businesses, farmers and staff.

Bank of Ireland has attempted to justify its announcement based on a fall in branch visits over the past 12 months. That fall is hardly surprising when every business is experiencing a reduction in footfall while people are told to stay at home. It should not be used as an excuse to shut branches. The bank is using it for cover when, in reality, it is punishing customers for following the public health regulations. It is not just a cynical move; it is a slap in the face that will hurt customers, staff and communities. Taxpayers poured €4.7 billion into Bank of Ireland during the financial crisis. The least the Irish people deserve from the bank is a little bit of respect. Sinn Féin supports the call by the Financial Services Union for a moratorium on branch closures until the end of 2022, by which time, we hope, the pandemic will be over.

Given the appalling behaviour of some of our banks and stockbrokers over the past week or so, we really need more time to deal with this discussion. It is not acceptable that our time is cut so short. There needs to be a huge amount more consideration, examination and questioning of these matters. Most people have been saying to themselves over the past few days, "Here we go again." We have had a clear demonstration that there is one law for our financial institutions and another law for everybody else. People feel very strongly that where there is wrongdoing like this, there must be consequences.

Yet again we see that there are not serious consequences. This amounts to white-collar crime. That is what we are talking about in the main in respect of stockbrokers. The rule of there needing to be consequences for crime applies especially to white-collar crime. That is why the Social Democrats has long called for an independent anti-corruption agency to deal with the kind of activity in Davy which has come to light in recent days. Davy, of course, has form in this regard. The firm was involved in the sale of Siteserv. We should not be too surprised over what has emerged in recent days.

I am concentrating my remarks on Davy and posing six questions to the Minster. I call on the Minister to answer those questions this evening if he can and I urge him to send a note if he is not in a position to provide all the replies. What happened to the money that was made from the transaction involved? Can the Minister let us know what happened to that? In The Irish Times today five of the principals concerned in this grubby affair were named but we know 16 individuals are concerned. Is it the intention to name all 16 publicly? Would the Minister accept that the rest of the staff - the majority of the staff in Davy - deserve for this to happen so that they are not covered by the questions that arise in respect of who exactly is guilty for this wrongdoing? What in the Minister's view is the appropriate action now for the NTMA to take, considering that Davy is the only Irish-owned primary dealer of Irish bonds? What should the NTMA do in respect of its involvement with Davy in light of the appalling behaviour and breach of trust by Davy? A number of senior Davy staff, including the chief executive, are what are known as pre-approved controlled functions staff. They have to be authorised by the Central Bank to fulfil that role. Is the Central Bank satisfied that all of the pre-approved controlled functions personnel in Davy continue to satisfy the bank's fit and proper standards? I am especially interested to hear the answer to that question either today or as soon as possible. Did the activity that the Davy 16 engaged in constitute criminal activity in 2014? Does that activity currently constitute criminal activity? Davy runs the Irish Stock Exchange. Is the Minister for Finance happy for that situation to continue?

I thank the Deputy for the different questions she has put to me. I was struck by what Deputy Shortall said. She said that nothing has changed. What has changed is that we have an independent regulator with strong powers at its disposal and a significant resource. It views these issues seriously, as evidenced by the statement made yesterday. If we wanted to see a signal of a different approach to dealing with these matters, it was in the statement made by the Central Bank.

On a point of order, I posed six questions and I did so briefly. With respect, I believe the Minister has an obligation to answer those six questions.

Far be it for me to decide whether that is a point of order. The Leas Cheann-Comhairle might give a ruling on that. I am answering the questions. Before Deputy Shortall decided whether I had answered them, she should have allowed me to conclude what I was saying because it was really important.

On the basis of what she said, I think Deputy Shortall bemoaned the lack of an independent regulator. Then she asked me a set of questions that are highly detailed and legally sensitive and which only the regulator can answer. Does the Deputy appreciate that I, as Minister for Finance, should not have the information on some of the questions she has put to me? That is why we have a regulator. The Deputy is asking me questions about what happened to money. The Deputy asked me to name people. That is why we have a regulator. It is up to the regulator to do this work. The thrust of Deputy Shortall's questions is, on the surface, serious. However, the questions do not recognise - and I know the Deputy knows this - the fact that many of the questions she put to me sit with the regulator to answer and not with me. If Deputy Shortall wants sensitive legal issues dealt with in a strong independent non-political manner - and I believe she does - then she knows these are questions for the Central Bank to answer and not for me as Minister for Finance.

I believe the Central Bank will be in front of the Oireachtas finance committee. Deputy Shortall will have an opportunity to put questions on some of those matters to the relevant person, although I imagine the Central Bank will be bound by law. I want to emphasise what I said on several occasions in the Dáil and outside it. What happened and what the Central Bank has detailed fall very far short of the standards we clearly expect. That is recognised by what the Central Bank has done.

The next slot is the Government slot. There are four speakers and Deputy Neale Richmond is first.

I am not going to try to do mental arithmetic but I want to speak for 30 seconds and put a question to the Minster. Many people have spoken about the dark past fortnight for the Irish banking system. So many customers and staff have been impacted. Many of us know, however, that this has been going on for some time. It has been going on since before the crash, when so many of our financial institutions were either wound up, taken over or moved on. I would appreciate whatever response the Minister can give and I look forward to questioning the Central Bank when its representatives come before the finance committee, under its Chairman, Deputy McGuinness, in due course.

Is the Minister comfortable and happy with the regulatory system we have in Ireland? Are customers getting the best options and value for money? Is it a banking system in which we essentially only have two or three banks left with another looking at the exit door? Is that sustainable? What can be done?

I believe we have a strong regulatory system in Ireland. We have a regulator that has demonstrated its ability to manage a complex financial sector in a way that looks to protect the safety of our economy and respect the need for the customers and those who depend upon the sector to be treated in a way that is fair. I believe we have a strong regulatory system here.

Deputy Richmond went on to ask me another set of questions regarding where our banking system stands at the moment and how it can move forward. They are really serious issues that I touched on in my speech. What happens to our banks matters not only to those they employ but it also matters deeply to the contribution they can make to our economy and to jobs within our economy. I have highlighted several of the issues that have got us to the point where we are.

Thank you, Minister. I am sorry to interrupt but there are three more speakers. They may wish to give the Minister more time - I do not mind.

I will conclude by emphasising the seriousness of the departure of Ulster Bank from our economy. We need to reflect on what that will mean for the structure of banking in our country in the years to come.

I want to make some points to the Minister. It is more than a decade since the people bailed out the banks. Unfortunately, we are getting badly thanked for that. Bank of Ireland has announced 103 branch closures in recent days, three of which are in my country. Templemore will now have no bank in the town. Cashel and Cahir, two strong tourist towns, are now to be left without a Bank of Ireland branch. Businessmen will have to travel significant distances with wads of cash to lodge to night safety deposit boxes.

Our most vulnerable people, who depend on the banking structure, are being left without a service. This is again stripping services out of rural Ireland. How can we hope to promote jobs when we are allowing the banks to strip services like this?

The second point I raise is the interest rates being charged by our banks. They are nothing short of extortionate. The latest figures from the Central Bank show Irish mortgage interest rates are still far higher than the EU average. The weighted average interest rate on new Irish mortgage agreements was 2.76% in December, making ours the second highest in Europe, just behind the one in Greece. The average for the euro area stood at 1.29% in December. There was already a clear lack of competition in the Irish banking market before we learned of Ulster Bank's plans to leave it. Essentially, we are now being left with two pillar banks, AIB and Bank of Ireland, which are carving up the market between them and charging what they like for credit facilities. This is making mortgages more expensive and is also making the cost of doing business far more expensive. Where is the benefit of the Single Market when it comes to banking in Ireland? Where is the competition, the international lenders entering the market? Why are Irish consumers paying twice the EU average when we borrow money? We must use our post offices and our credit unions but we also need to attract European banks into the country to make our banking system more competitive and cost effective.

My final point is that many people are struggling financially at the moment and some need a break from payments to keep their heads above water until they are back in work. When I call for a moratorium I mean a full one and not what the banks are offering at the moment. When people get a moratorium, it should be just extended onto their loan at the end and should not bring extra costs to the borrower as it does at the moment. The moratorium is just adding costs for people who are already in trouble.

Everything changes yet everything stays the same. Professor Sean Barrett of Trinity College Dublin, a former Senator, used to have a phrase when he was in that House, "There is a back stairs for the banks into the Department of Finance". We were in government when he first said that but nothing has changed and that notional back stairs is still very much there. We formulate policy to facilitate the banks' profitability and tell the people it is in the systemic interest of all communities. I am not against profitability but I am against a stacked version of the rules that facilitates their profitability at the expense of our community. To me that is not democracy.

It used to be Fine Gael policy and indeed Fianna Fáil policy that we would have a State bank, that we would establish one with the needs of the people in mind, one with interest rates that were not extortionate, as Deputy Cahill put it. However, we have not done that. Once people go into government in this country, they go native. We are told we cannot spook the markets. We are told we cannot spook the horses, we have to keep things stable. Deputy McGuinness has made a very good suggestion which I support, namely, that we must move towards community banking. We no longer have mutuals in this country, there is no Irish Permanent Building Society, no Educational Building Society and no Irish Nationwide Building Society. Some may celebrate that fact but the reality is we only have what is driven by cold profitability.

This week we see Bank of Ireland throwing its staff under the bus in the interests of technology. Ulster Bank did it before Bank of Ireland, as did AIB to an extent. Believe me, AIB is coming like a train to do the same, when it sees the reaction. When I read our party briefing material on Monday morning, having heard about it on "Morning Ireland", I said it looked like it was written by the banks. It was using terms like "counterparty" and so on. As a former financial services employee, those are the terms of lease agreements, loan agreements and so on. It is time, therefore, we began to realise the systemic importance of our communities and put people to the centre of that. To that end, we should embrace what was a Fine Gael policy, and I want my party colleagues to embrace what was our policy. We did it with the Agricultural Credit Corporation, ACC, and with the Industrial Credit Corporation, ICC, and it was never more needed than it is today. We cannot operate a democracy where, depending on who the protagonists are, there are different rules. As we saw with Davy Stockbrokers and so on, we must keep adjusting laws to facilitate their profitability so let us get into the market ourselves, establish a people's bank, through An Post, the credit union movement or others, and put our people at the centre of our financial policy.

In the ridiculously short time available to me I am not able to discuss Bank of Ireland but suffice it to say I agree with the remarks by Members on all sides of the House. I will confine myself, in the few minutes I have, to the situation with Ulster Bank.

The key question with Ulster Bank is who steps into the breach. Who will step into the breach in relation to SME lending and lending to homeowners? Be it called public banking, community banking, a third banking force or whatever one wishes, unless we move quickly to establish some sort of realistic competition in this country, a number of consequences are inevitable, none of which is particularly palatable for the people. One potential consequence is that the duopoly of AIB and Bank of Ireland, which controls, for example, 60% of the mortgage market, will tighten its grip on that market. The result of the power they have over the mortgage market at present means this country is paying the highest mortgage rates in the civilised world. Any further diminution of competition arising from the departure of Ulster Bank will only further exacerbate that situation.

Another potential consequence is that NatWest, to release its capital from this country, may sell to a third party, commonly known as a vulture fund. I notice one particular vulture, Cerberus Capital Management, is reportedly circling ominously at present. It is very appropriately named because, in Greek mythology, Cerberus was the monstrous creature that guarded the gates of hell and prevented its inmates from escaping. It was supposed to have had three dog's heads, snakes growing from its body and a serpent's tail. The vulture funds, including the latter-day Cerberus, have a long and distinguished record of consigning people to a living hell from which they can never hope to escape.

I have been listening to the Minister telling us for the past few days what powers he has and does not have, mainly the ones he does not have. Whatever about the powers he has or does not have, he certainly has a duty and a responsibility to do all in his power to ensure the small businesses and homeowners of the country do not fall into the clutches of such a rapacious monster or any others of its ilk.

The decision of Bank of Ireland, following in the footsteps of Ulster Bank just a few days previously, is about so much more just than bank closures. For towns in my constituency like Ballygar and Dunmore in County Galway and Elphin and Strokestown in County Roscommon, and the communities who live in them, it means the end of local banking services. The consequences of that for those communities are far greater than just banks closing their doors. As happens quite regularly, this decision was made without any consideration for rural communities or any understanding of rural areas. If I live in Elphin and my local Bank of Ireland closes and I need that bank service, I have no bank now within 20 km. The nearest possible bank is in Boyle. If I am in my 70s and no longer drive, my only option now is to get a bus to Boyle to get to the Bank of Ireland. That will take between three and a half hours and six hours, depending on the bus route. The minimum journey time for that elderly person is three and a half hours and that is just to get to the bank. The branch in Strokestown may possibly move to Roscommon with no public transport links at all.

To the poor public transport infrastructure in these areas we must also add poor quality and in some cases totally unavailable broadband. I think of my own nanny and others of her generation who have no computer, no interest in using one and who would not want to in any case. Again, this decision by Bank of Ireland totally disregards that entire generation.

Where is the Central Bank in the context of its customer protection duty? It is nowhere to be seen for these customers.

I listened to the CEO of Bank of Ireland being interviewed on a radio programme earlier this week. She insisted that the decision is based on the fact that three out of four of its customers had not set foot in a bank branch in the past year and that footfall had halved in the past year. We are in the midst of a global pandemic. Those people are only abiding by and complying with the public health restrictions. It is a very handy excuse for Bank of Ireland and that has not been lost on their customers or these rural communities. Indeed, it makes the announcement so much worse that the bank would take this step in the midst of this pandemic. Its most vulnerable customers have been cocooning for the past year, in many cases to save their own lives, while its business customers have had their doors closed and been under significant pressure. It is no coincidence that in recent days three banks have decided to pull services, regardless of the fact that we are in the midst of this pandemic. The banks see no issue with doing so. Why is that the case? It is because they can get away with it as they know the Government, which is a major stakeholder in Bank of Ireland, will take no action. I note the remarks of the Minister in respect of intervening in this situation, but he could open his mouth on behalf of these older people and rural communities that, again and again, are being left behind.

The most disappointing part of this entire decision is the impact it will have on rural development for the towns that will lose a bank branch. Many of them will be left with no bank at all. For the first time in my lifetime, for the best part of the past year we have been seeing people moving out of cities and into rural areas. That is a significant opportunity for these communities. People are actively looking to move to these areas yet, at the same time, services are still being stripped out of these communities. How then do these rural areas attract the young people who may have emigrated or entice families back to rural areas when they do not even have something as basic as a bank branch? Of course, the closures will also impact on new businesses, job creation and lending to SMEs, as research has shown. That will again reduce economic activity in these areas where it is so badly needed.

It is very easy for the Minister to say that he cannot intervene but we are talking about some of the most vulnerable citizens in the State and rural areas that, for a change, were in the best position to increase their population. We need to back that up with services if we are to keep those people in those areas. I ask the Minister to consider the impact of this decision. I understand that he cannot intervene, but he is a major stakeholder on behalf of the State and he could, at the very least, open his mouth or ask the Central Bank to step up and perform its duty.

The inescapable logic of what needs to be done in response to what I consider to be a pretty serious crisis in the banking and financial system is that we need to take it into public ownership. The Minister might say that my colleagues and I were always going to say that, but I think it sort of adds weight to a socialist case that has long been made, one which we strongly put forward in the aftermath of the financial crash of 2008, that very unlikely voices in this House who are part of one of the Government parties are now making exactly the same case, namely, that a profit-driven banking and financial system is simply not up to the job of providing the banking and financial services that society needs. As the banks put the interests of private shareholders first, they are willing to throw communities the length and breadth of the country to the wolves in terms of banking services and jobs for very significant sections of society. This really is creating a very serious crisis for the whole financial system.

This should be considered together with the Davy scandal that has broken and that also has its origins in the sort of rotten, profit-driven culture of the banking system in this country and, in particular, Anglo Irish Bank. As Members know, Mr. Kearney was one of the "Maple 10" and he initially was given money to buy Anglo Irish Bank bonds to artificially keep up the price of the bank. That scandal is still with us. What has been revealed is an insider trading scandal in one of the supposedly most respectable stockbrokers in the country and which actually has its origins in the rotten, profit-driven banking culture that has done such damage to our society. That damage continues to be felt. Now we have these bankers whom we bailed out at a net cost of €41 billion and this is how they thank us. This is how they thank their customers and their workers - they just shut down. The rotten carry-on that we saw in Anglo Irish Bank still ripples through to what is going on in Davy Stockbrokers as these ruthless, profit-driven people are shafting each other with effective insider trading.

Of course, that all has a cost for society because the money these people make does not come from nowhere. Ultimately, it comes out of the pockets of ordinary people who work for these institutions and from society as a whole. I put it to the Minister very seriously - I know he thinks I was always going to do so - that the case for having a not-for-profit publicly run banking system that has social objectives rather than profit as its objective is now unanswerable.

The Minister, Deputy Donohoe, is a Minister for the rich in a Government for the rich. He is a Minister for the fat cats in a Government for the fat cats. He is a Minister in a Government which does not give a damn about working people. Ulster Bank put 2,800 jobs in jeopardy but there was no action from him. Bank of Ireland axed 88 branches and is driving for 1,400 redundancies but there is no action from him. He has taken no action despite the fact that he, as Minister for Finance, is a very significant shareholder in the bank. He did not even raise a finger to try to stop it.

However, then AIB planned a takeover of Goodbody stockbrokers. Goodbody executives are not bound by the pay limit for bankers of €500,000 per year but AIB executives are so bound. So now none of them can avail of bankers' bonuses, right? No, completely wrong. Why is it wrong? Thanks to the Minister, Goodbody executives can still avail of bonuses, while AIB executives can now transfer to Goodbody and avail of them too. In the middle of the pandemic and without so much as a memorandum to Cabinet, in the week after thousands of bank workers saw their jobs put on the line, what has the Minister done? He has opened the door to bankers' bonuses all over again.

I will finish the way I began. The Minister, Deputy Donohoe, is a Minister for the rich in a Government for the rich. He is a Minister for the fat cats in a Government for the fat cats. He is a Minister in a Government which does not give a damn about working people. He is an absolute disgrace.

The decision this week by Bank of Ireland came as a major shock to people around the country, particularly in my constituency, where three bank branches in major towns will close.

The decision will impact my own area of Youghal. Cobh will see the closure of a bank branch servicing 20,000 people. The branch in Mitchelstown will also close. I find it highly unusual that Bank of Ireland would take action to close a considerable part of its national banking network in the middle of a pandemic. It is disgusting that the bank is taking advantage of the situation we find ourselves in at present to make this decision.

It is absolutely certain that the CEO of the bank will bring home roughly €1 million this year. I am sure the executives will be very well looked after. My constituents in Cork East are not being looked after. They are going to lose three vital banks in their constituency. It is shocking. I strongly encourage the Minister to take direct action because the State is a 70% shareholder in Bank of Ireland. I stand to be corrected if I have that percentage wrong.

The banking sector in Ireland is in crisis. There is no getting away from the fact that we are seeing the exit of Ulster Bank. We are also seeing a situation, on top of Bank of Ireland's decision, whereby AIB is also considering closing a massive part of its national branch network. It is highly concerning. We must remember that hundreds of thousands of citizens do not even have access to the Internet, never mind online banking. Those are vulnerable citizens who need access to banks and the State should intervene urgently. The wall of silence from the Department of Finance is completely unacceptable.

I call Deputy Calleary.

I will take Deputy Calleary's slot, if the Leas-Cheann Comhairle does not mind. I welcome the opportunity to contribute to the debate. Alas, we are speaking in the aftermath of Bank of Ireland's decision to close two branches in Duhallow, those in Millstreet and Kanturk. That is a damaging step to the barony of Duhallow and the neighbouring region on the Kerry side. A whole raft of countryside will be left without an operating branch of Bank of Ireland. The Duhallow region has been very supportive of Bank of Ireland over the generations. Many businesses, going back decades, including agricultural and large indigenous businesses in Millstreet and Kanturk are being left without a branch.

When we look at what is being offered in its place, we can look at what is offered by An Post. Deputy McGuinness made reference to the value that would be to the postmasters. It is not a realistic option at all. It is simply not viable for An Post to take that on. The bank owes the communities it is leaving. It should look at the Duhallow region and at least retain a bank there because a whole raft of countryside from north Kerry and west Limerick to Mallow will be left without a branch.

The bank must also look at the disposal of its buildings. They should be sent for community use and not looked at as commercial entities. The bank is leaving elderly customers, vulnerable people and viable businesses behind. It is walking away from customers who have stood by the bank through thick and thin. It owes it to those people to make those buildings available to An Post, if the deal with An Post is so lucrative. The bank must make sure that An Post get first charge on the buildings or that they go for community use. It is the least the bank should do when it is turning its back on people and communities, such as my own in Duhallow, who have been loyal servants over many generations. It is an appalling vista.

I am not sure who is next. Is it Deputy Calleary or Deputy O'Callaghan? Are they both speaking in this slot?

I will go first. The departure of Ulster Bank from the banking sector is a major development of significant proportions. It is, unfortunately, a negative development not only for the banking system, but also for the economy. We know that Ulster Bank has been in this country for more than 160 years and during that time, it has provided a service to a large number of people. Its decision to depart means, unfortunately, that the banking system is very uncompetitive at present and, to a large extent, the main players in the banking market are entities in which the State has significant shareholdings. The State has significant shareholdings in AIB and Permanent TSB and a smaller shareholding in Bank of Ireland. The public are entitled to ask what benefit we are getting from having large shareholdings in these banking institutions. I do not see us as getting benefits out of the large banking institutions if we cannot in some way influence their direction.

I am aware that there is an issue about the closure of branches. It is a significant disadvantage for people who live in communities to be told that their local branch is going to close. We need to recognise that the banks' plans for the future probably do not include many branches on high streets in our country. We need to play a part in trying to formulate a vision for the future of banking in Ireland. If we do not try to get involved, a situation will develop whereby banks are going to simply pull out of different branches and hope that all forms of banking will be developed online.

We need to recognise that, years ago, bank managers played a very important part in the community and the reason there was importance placed on them was because of the autonomy and authority that was given to them in respect of the decision they could make at a local level. What has happened now in banking is that all the major decisions are being made centrally, in Dublin or other large cities, such as Cork and Limerick. We need to try to redevelop banking so that the individuals who are the bank managers in local communities and know the communities can make decisions.

The Minister needs to consider a forum on banking because if we just allow it to develop the way the banks want it to, they are inevitably going to push down their costs to increase their profits. The banking network that we see operating in Ireland at present will not look anything like this in years to come. Banks will be gone from the main street and, ultimately, people will be forced to do impersonal banking online. That is not for the benefit of the country and it will not be for the benefit of people who are engaged in banking or for the benefit of our economy.

I join many colleagues from rural areas in expressing concern about the Bank of Ireland closures. In my own county, branches will close in Ballyhaunis, Kiltimagh and Charlestown, in addition to Ballymote and Tubbercurry in south Sligo. It means that an entire swathe of east Mayo and south Sligo will be without a branch service. Many people may dismiss that, but it is a very real concern. Many people are not capable of Internet banking and the alternative An Post service, while welcome, is not sufficient for banking.

I endorse the point Deputy O'Callaghan made about the physical removal of branches. It is only the latest example of the removal of power from branches and branch staff who know an area and its customers best. We now have lending and decision-making authority centralised where there is no understanding of the day-to-day economy. We must address that.

The manner in which Ulster Bank, in particular, rolled out its announcement was abhorrent. It told its staff 24 hours before the decision was announced that no decision had been made, while part of its loan book had been sold. That is a disgraceful way to treat staff. It is also reflective of the way communities are being treated.

The Minister said earlier that we need to reflect on our new banking environment. What will that look like? We need to reflect on that now. We need to reflect on the possibility of the State being involved in some way, as it was previously with ACC Bank and ICC Bank. Is the Minister satisfied that the current rates of interest, bank charges and rates of dealing with SMEs are appropriate for the size of our economy? There are tough decisions to be taken. I have no doubt that he will take them with integrity and commitment but we need to take those decisions and engage. I will leave it to him to start that process with a sense of urgency.

There is a little over a minute left in the Government speaking slot. May I make two points in response to the issues that have been raised?

I note, in particular, the points that were made by Deputies Calleary and O'Callaghan. They raised the question of the seriousness of what it means for Ulster Bank to leave Ireland. I want to offer one key point for speakers to reflect on. Many here this evening are being critical of decisions that have been made by some banks as they look to make profit, or make profit in the future.

At the same time, the level of profit that was available in the Irish banking sector was not sufficient for a bank that has been present in Ireland for 160 years, and it has left. These issues are related and relevant when we are discussing what kind of banking sector we want and its future structure. A bank that has been present in Ireland for more than a century decided its ability to earn profit, of which we are critical at times for good reason, was not sufficient for it to want to stay here. I make that point while also acknowledging the issues that have been raised by many Deputies regarding the standards that banks have to meet, the role they play and what their withdrawal means for so many communities, but it is equally relevant to the challenge that we face regarding the future of banking.

The Minister will be very familiar with the mica redress scheme for defective concrete blocks in Donegal. It is the culmination of many years of campaigning by families, similar to the campaigns in Dublin and north Leinster, that led to the pyrite resolution scheme. Unfortunately, the scheme in Donegal is turning into a big problem. There was a necessity for 10% funding for the costs of engineering and construction, but families are finding out that the cost of demolition and reconstruction of their homes is way beyond the maximum grant available. The cost of replacing the outer leaf at the lower end of affected walls is already way above the maximum grant available. Families who have waited all these years for some hope of making their homes safe have been left in a desperate situation, through no fault of their own. It is the result of a failure in standards and oversight by the State in the construction of concrete blocks. Hardly a day goes by that I do not speak to families about their despair.

I am calling on the Minister for Housing, Local Government and Heritage to carry out an urgent review of this scheme based on the applications already submitted to Donegal County Council and the Department. There is a widespread belief in Donegal that the scheme is not fit for purpose as currently designed.

I say that for the information of the Minister, but I wish to raise with him another matter. Deputy Doherty and I wrote to the Minister, Deputy Donohoe, and the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, asking where the banks were in all of this. The banks are having their assets all across Donegal reinstated from site valuation to full market value. Their assets will be enhanced by tens of millions of euro if not hundreds of millions of euro. I am not aware of a single bank that has stepped up to provide financial assistance to the families. Will the Minister for Finance and Minister for Housing, Local Government and Heritage urgently convene a forum of the banks and financial institutions to demand that they make a real contribution, along with the affected families and the State, to the challenge of making these homes safe?

I listened to what Deputy Mac Lochlainn said. I was very much aware of this issue when I was Minister for Public Expenditure and Reform and of the significant difficulty many families faced as a result of dealing with the awful effect of mica on the structure of their family home. In truth, I was not aware of the issues the Deputy just raised with me, so I will have to check the correspondence he sent me and then revert to him. I accept the seriousness of the issue, but of late I have not been as involved in it as I was when the scheme to which the Deputy referred was designed. I will revert to the Deputy with an answer to the correspondence he has sent to me.

I appreciate the Minister's offer. Will he confirm that he accepts the point I make that it is extraordinary that the banks that will benefit, potentially by hundreds of millions of euro in asset gain, have not offered to make a contribution? Does he agree that is extraordinary?

I am not sure I fully understand the point the Deputy is making. In truth, I do not follow his point. Is he referring to the value of the properties that have been affected by mica and have a mortgage on them? If he could perhaps explain it to me again, I will respond.

To be very clear and brief, the Mica Action Group that led the campaign carried out a survey of the affected families. Right now, the assets of the banks are worth very little more than the site valuation. The houses are not worth anything, but when they benefit from the scheme, they will be restored to full market value, which is worth hundreds of millions of additional euro. That is a huge gain for the banks.

I thank the Deputy.

My question is why the banks are not playing a role.

The Minister will have to correspond with the Deputy or answer in a different forum because we have gone beyond the time. I am moving on to the next group, an Grúpa Régiúnach, a Theachtaí Tóibín agus Naughten.

Tógfaidh mise ceithre nóiméad go leith.

Is that agreed? Agreed.

There is a banking crisis unfolding before our eyes in real time in this country. It is one for which the Minister, his party and the Government are in large part responsible. I have listened as, one by one and with furrowed brows, Fianna Fáil and Fine Gael Deputies rose to their feet in this Chamber and fretted about the closure of banks in their constituencies. Each was careful to mention every town that has been stuffed by these decisions in recent times, yet none of these Deputies has admitted that there is a major problem with the market structure in this country as regards banking and that the Government is responsible for the market structure.

The crisis is happening for a number of reasons. The main reason is the unbelievably uncompetitive banking market that exists in Ireland. This is a threat to staff, customers, small businesses, farmers and regional Ireland. It is happening because we have a duopoly that was created by a former Minister for Finance, Michael Noonan, when he created a two-pillar banking system. The two large banks have unbelievable supplier power. They can determine every aspect of their engagement with customers. They can literally do whatever they like to customers because if their customers do not like it, they can get stuffed. They have literally nowhere else to go at this stage. I spoke to an individual who wanted to know what they could do in their town given the retreat of the banks, and if people should barter. The banking market should consist of a large number of players which are all smaller. That would reduce supplier power, increase the buyer power of customers and equalise the power between both the supplier and the customer. Anybody who is studying leaving certificate economics at the moment would understand that. When Mario Draghi was the head of the European Central Bank, he referred to the Irish market as a quasi-monopoly.

I have listened to the Minister say all night that he cannot do this and he cannot do that. I do not expect him to direct any bank to do anything, but he is responsible for the structure of the market and that is the most frustrating element. That has not been discussed so far in this debate. The economic dimension has been absent. There is a desert of economic expertise coming from the Government Deputies. I have raised the issue a number of times with the previous Government and this Government and I have called on the Minister to do the job with regard to the reform of the market, yet he refused to do it. That is not unusual because this type of market dysfunction is normal in this country. We have it in the beef market. We have it in the insurance market. The housing market displays market dysfunction. I do not know the reason the Government will not get involved to fix it. I am not sure whether it is due to ideology or incompetence. I am not sure exactly why the Government sits on its hands when it comes to this.

Yesterday, I spoke to the Minister for Public Expenditure and Reform in the Oireachtas Joint Committee on Finance, Public Expenditure, Reform, and Taoiseach. He admitted to me that the Government had no plan to fix the dysfunctional banking market in Ireland. He also admitted that there were no plans to set up a stakeholder public bank. He said there were no plans to increase the banking capabilities of the post office network or the credit union system.

We come in here and listen to non-stop platitudes about the post offices and credit unions, yet there are no plans at this moment of crisis in the banking industry for the Government to increase the banking capability of these two institutions.

Does the Minister accept that he is the Minister with responsibility for the structure of the banking market? Does he have any plan to set up a stakeholder public banking system? Does he have any plan to increase the marketing capabilities of the post office network? Does he have any plan to increase the banking capabilities of the credit unions?

In the aftermath of the decision by Bank of Ireland, a major opportunity has been announced for post offices to go into partnership with Bank of Ireland to try to develop services. I am not sure if the Deputy was aware of that but it is pertinent to the point he is making. The Deputy asked if I have plans to set up a new public bank. Is the Deputy aware of the work of the Strategic Banking Corporation of Ireland? Is he aware of the work that the Ireland Strategic Investment Fund, ISIF, is doing in supporting Irish innovation and companies? These demonstrate the role the State is playing in trying to put in place formative investment in our country that the banking sector cannot provide.

In my constituency, the Bank of Ireland branches in Elphin, Strokestown, Ballygar and Dunmore are about to close. This is a significant blow to those communities which have been served by these branches. It will make it far more difficult for those communities to recover from Covid. In some instances, Bank of Ireland does not even provide an ATM in the towns on a 24-7 basis. Prior to Covid, many of these towns were beginning to reinvent themselves, especially with the opportunities provided through Government funding for tourism, rural regeneration and the town and village renewal scheme. The decision by Bank of Ireland will be a significant setback to those plans.

The Government needs to urgently revisit the establishment of a State bank for SMEs and personal customers. I heard what the Minister said about ISIF and the Strategic Banking Corporation of Ireland but those are dependent on having a commercial bank to access those funds through. We need to examine how we can provide a commercial entity for people, whether through An Post or the local credit union network, where infrastructure, facilities and visibility in our communities are already present. A new State bank offering low interest rates without personal guarantees is now required to support both businesses and communities as they begin to reopen and emerge from this lockdown.

Before the pandemic, 250,000 SMEs accounted for 99.8% of the total enterprises in the country and 65% of total employment. As we know, SMEs have been the backbone of the economy, especially outside our cities, and have been key employers outside the urban areas of our major cities and conurbations. They need to have backing and access to vital capital. It is also important that we provide cheap green finance to homeowners and landlords to upgrade housing stock. We should issue a loan for retrofitting homes at a 0% rate. An Post has already started by launching its green hub loan scheme, but that is at an interest rate of 4.9%. It is far too expensive. Cheap money needs to be made available to these homes.

Last October, David McRedmond, the chief executive officer of An Post, wrote to the Department of Finance, setting out An Post's ambitious financial services strategy and the key role it has played in enabling SMEs to trade, both domestically and internationally. He said An Post would be keen to be part of any solution that may be considered by the Department of Finance to facilitate competition in the market. Has the Department of Finance responded to the offer made by Mr. McRedmond?

Deputy Naughten made the point that we should have a State body that provides unsecured loans at a low interest rate. That illustrates the difficulty with such a State body. I have not received such correspondence yet from Mr. McRedmond. I will check to see where it is and I will respond. An Post is moving into a new partnership with Bank of Ireland. With respect to Deputy Naughten, the vision he has outlined for an institution funded by the State, with low interest rates and unsecured loans, shows why that institution does not exist.

I have listened to the debate for the last hour and a half. It has been interesting. I believe, like many other Deputies, that we have to acknowledge that we are deeply disappointed with the branch closures in each of our constituencies. In my constituency, branches in Glanmire and in Munster Technological University have been lost, which is disappointing. My first question is on the Minister's response to Deputy Jim O'Callaghan in which he said that Ulster Bank took its decision because it obviously felt there was not enough profitability in the Irish market. What does the Minister think is the reason for the lack of competition or attractiveness of the Irish market as a whole? There is obviously a reason for it and I am interested in the Minister's view. The second question is about the credit guarantee scheme, which I have asked the Minister about before. There has been disappointing uptake of it. Only 10% of the €2 billion earmarked for the scheme has been drawn down. I am aware of individual cases involving people who have hundreds of thousands of euro worth of contracts and are looking for a relatively small loan to assist with cash flow, and are finding it difficult to get anything from the banks. I would appreciate a comment on that.

Deputy O'Sullivan raises an important point. In some lending schemes that we have put in place, the amount of capital we made available has been fully drawn down. Some other schemes, which Deputy O'Sullivan may well be referring to, have not seen the same demand. We will have to examine whether there is a case to reallocate that funding, what we can learn from schemes that have gone well, and if there is a need to amend schemes for which there is not the same level of demand. That said, we are probably only now approaching the point where we are likely to see SMEs that want more credit decide to take it.

The Deputy made a point about the lack of competition. I emphasise a significant factor in the lack of competition we are debating and to which I referred in response to Deputy Calleary. A key factor in Ulster Bank's decision was that it did not believe it could earn the kind of profit in Ireland that made it worth its while to stay. That matters to the 2,400 people it was employing, which is why I am interested in it. It matters to the more than 2,000 people who depended on their employer being able to be profitable in the future, which they needed to warrant staying with it as an employer.

I will have to stop the Minister. There are three speakers left and we have to be fair.

That is relevant to the question the Deputy put to me.

I welcome this evening's discussion and debate on the difficulties facing the Irish banking sector. I acknowledge the Minister's contribution and the challenges faced by the banks in the market. More importantly tonight, our concern is about the employees and those who have lost their jobs. The news that Ulster Bank intends to exit the market after 160 years, as the Minister noted, is worrying not only for the banking sector but for the economy itself, as is the news of Bank of Ireland's decision to close 103 branches across Ireland.

My thoughts are with the staff of those institutions as they face a very uncertain future, particularly at this time. Retail banking is going through a period of uncertainty and change, and the future will be challenging. However, there are some encouraging signs, particularly the NatWest announcement that it is in early discussions with PTSB on the retail network and has reached a memorandum of understanding with AIB on certain commercial loans. I call on the Minister to convene a high level task force of stakeholders to examine the future of banking in Ireland. As other colleagues mentioned previously, we need to look at what the future of banking will be in Ireland. How is it going to interact with retail customers in terms of providing a retail or high street banking service, and also with commercial businesses? We need to ensure that there is an offering that is both tangible and accessible. We must ensure that towns have access to retail banking facilities. This does not just affect rural Ireland; Dublin is also impacted by the latest decisions. We must ensure that SMEs have access to credit and lending facilities and that people have access to mortgage facilities. Credit unions and the An Post network have a vital role to play as intermediaries in the banking sector. I hope that Bank of Ireland proceeds with its proposal involving An Post but investment in IT, facilities and training will be required. I ask the Minister to encourage and ensure such investment is made because as the face of retail banking in Ireland changes, we must make sure that we keep up with modern advances. We must also ensure access to lending facilities for SMEs. This is something that the high level stakeholder group could examine. It is critical that we retain a banking sector that is diverse, modern and that serves customers and the Irish economy.

From the Minister's own discussions with the banks, is there a possibility of a new entrant, perhaps from Europe, to the Irish market? Obviously, I note the Minister's comments on Ulster Bank and the lack of profitability but it would be a great shame if we could not entice another operator into the Irish market.

I join a surprising amount of my colleagues tonight in asking that we would once again consider public banking. I am very aware that we have had this discussion previously. I accept the Minister's points about the ISIF and the Strategic Banking Corporation of Ireland but, as we have heard tonight, the Ulster Bank and Bank of Ireland announcements will come as a particular blow to SMEs that already face the twin challenges of Brexit and the impact of Covid. As the Minister said, Ireland is a small market in financial terms and will always be at risk of a privately owned bank making the same decision that Ulster Bank has made. Ulster bank had been in this country for 160 years and was reporting profits but felt that its capital and efforts could be deployed more profitably in larger markets. That is a decision that makes sense for Ulster Bank. It is also a decision that may make sense for any privately owned bank in the Irish market and that is one of the reasons we need a public bank with a defined regional basis that is profit making but not profit maximising.

In 2019 the Government published an independent report undertaken by Indecon which found that there was not a compelling economic case for the establishment of a new State-owned public banking network because there was sufficient competition in the banking sector and no sign of market failure. However, this is now no longer the case. The removal of banking facilities from communities has an immediate impact on financial inclusion and on the relationship between SMEs and access to credit regionally. In a number of recent reports both An Post and the credit union sector have been identified as points of access to financial services within communities. However, a failure to expand the remit of credit union financial services and the constrained nature of banking services within An Post, which operates only as a service provider for the pillar banks, minimises growth and profit for both organisations.

The Green Party believes - and will hopefully publish a paper on this tomorrow - that a public or community bank supported by the credit unions and An Post would be a locally focused organisation with a mandate to serve the community in its region by providing finance and other modern banking services to the real economy. This would fill the space previously occupied by ACC and ICC which were unfortunately sold to commercial banks during the Celtic tiger years. Public banks such as these number some 1,000 and exist in 21 countries across Europe. They are not a strange animal. I urge the Minister and the Department to now set aside the 2019 Indecon report which has proven to be incorrect in its confidence in the existing banking sector and begin again to consider a public banking model. In the time remaining, I would like to hear an answer on whether there are any likely new entrants to the sector.

There are no likely retail entrants into the Irish banking sector in the immediate future; none. The possibility that this may change in the medium term exists. It may change as the banking sector overall regains a degree of profitability but there are no large European or global retail banks considering moving into Ireland in the immediate future. We have had a bank leave Ireland and I am afraid that the gravity of that, in terms of why the bank has left Ireland and what that means for the banks that we still have here, is underestimated by many at the moment.

We are having a debate and Opposition Deputies in particular are calling for new retail banks to come to Ireland while at the same time, they are calling on the existing banks in Ireland to do things that would mean that any new retail bank is less likely to come here. The more likely sources of immediate innovation and new banking services are non-bank lenders. By non-bank lenders, I mean entities that are providing branch services directly to consumers but which do not have branches in our country. They provide those services purely by technology. It is really remarkable that while many Opposition Deputies in particular have commented on the effect that the lack of a branch will have on older customers, which I recognise, there has been so little acknowledgement of how people's relationship with banks has changed because they are deciding to do more banking on their phones. The impact of technology and what that means for banks is really relevant to the future of the sector we are debating.

We are moving on to the Rural Independent Group, whose three speakers have approximately two minutes each.

There is not going to be much left in rural Ireland now. The banks are going, the post offices have gone and many of the pubs are closed. There is not going to be much left. It is like the 2040 plan, where everything is geared towards the five big cities with planning, housing, money and all kinds of infrastructure, and rural Ireland is forgotten about. It must be recognised that if one lives in a place like Shronahiree in Glencar or Derrynafeana or the Black Valley and the bank in Killorglin closes down, where is one to go then? Likewise in north Kerry with Tralee, Castleisland and Abbeyfeale. Where did the people of Knockafreaghaun, Muinganear and Brosna go to, only to Abbeyfeale? They have massive distances to travel now. If one puts those placenames into a computer to see where is the nearest Bank of Ireland branch, it would take one a day to get there and back.

The Minister has a role to play here. The people are entitled to services. The people in rural Ireland are entitled to the same services as the people in Dublin 4. I heard one Deputy say that this will also have an impact in Dublin but if one takes a walk around the streets of Dublin, one will pass three or four different banks in ten minutes. That is massively different to the set up in rural Kerry. I am asking the Minister to realise that he can do something here. He has a share in Bank of Ireland. Surely he can demand of it or at least sit down and talk with it. I want to say to the backbenchers of Fianna Fáil and Fine Gael that they will have to collar their Ministers and their Taoiseach in their party rooms and tell them that this is not good enough for rural Ireland.

The decision made by Bank of Ireland to close 103 of its branches in Ireland, including 88 in the Republic, two of which, in Bantry and Dunmanway, are in my constituency, is a grave error of judgment. For several years, the bank has been dismantling the personal service which existed for generations and replacing it with banking machines in a bid to reduce staff and costs. However, the price to be paid for that is the weakening of customer loyalty to the bank and the loss of knowledge by the bank regarding the individual needs of the customers and communities it serves.

Over many years, Bank of Ireland branches in Bantry and Dunmanway have gained an insightful and valuable profile of these loyal customers and this healthy symbiotic relationship has thrived to the benefit of the bank and its customers. Small businesses and farming families especially have a long-standing relationship with the local bank manager and face-to-face meetings rank highly in discussions of projections, business plans, loans, etc. The past year has seen a marked increase in the number of houses sold in rural areas, especially west Cork. This growth in rural dwellers will bring increased potential for banks as new houses are built and fresh businesses spring up. However, Bank of Ireland has made the decision to pull the plug on communities and not to ride this wave of opportunity.

The branches in Bantry and Dunmanway serve a huge area, from Castletownbere to Durrus, Kicrohane to Schull, Goleen to Drimoleague and all the way to Ballineen. A massive vacuum now exists where there is no provision of Bank of Ireland services in these areas. I know more than most how a community can suffer. I come from Schull, where our AIB branch closed 2012. The next thing that happened in the village was the closure of the second biggest shop in the town with the loss of 20 jobs at least. The Government is standing idly by. I have been listening to Teachtaí crying crocodile tears. The Government can intervene in the banks when it suits, but it will not intervene now when it suits customers. It is time to get up and wake up. AIB, Ulster Bank and PTSB customer services are diminishing in west Cork. We need the Government to intervene, but it is not doing so.

As a major shareholder, was the Government aware of Bank of Ireland's plans to significantly reduce its presence in the community? Was the Minister privy to this information regarding the closures before the sudden announcement on Monday? Does the Government support Bank of Ireland and its decision to close more than 100 branches? Is the Government's policy to support Bank of Ireland and these closures, which are concentrated more in rural locations than urban settings?

Four bank branches are closing in County Limerick. Branches are closing in Askeaton, Abbeyfeale and Rathkeale in the west of the county, Bruff in the east and three branches are closing in the city. We are so lucky we have our credit unions and post offices. They remain in Ireland and are showing commitment to the communities and neighbourhoods in which they are located. Does the Minister know that all the boards of the credit unions are made up of volunteers? That is why they have the community spirit to hold on and look after people in our communities in towns, villages and rural areas. It is because of the involvement of volunteers from local areas.

I am especially appalled by the number of people who tell me they got into trouble during the previous bank crisis but continued to speak to their banks and pay off their loans. Yet, when these people go to the banks they are treated badly and always reminded of when they were in trouble. How can the banks get away with this? They are forcing customers to stay with them. Those customers cannot move because of their credit history, despite having made major repayments on their loans. Where is the Central Bank in this situation? We heard about the insurance industry last week. The Central Bank sits idly by in regard to the insurance companies and the banking sector. Who is the Government looking after here? Is it the people of Ireland or is the Minister working for the banks?

The Minister has repeatedly stated that the banks are independent and he cannot determine what they do. NatWest Bank, the parent of Ulster Bank, has decided to leave the Irish market. Does section 10 of the Central Bank (Supervision and Enforcement) Act 2013 not allow the Government to set the parameters and conditions for banking in Ireland? Is that not the same power as the State, if not the Government directly, has in being able to set the parameters governing mobile phone providers in Ireland? A good job has not been done in that regard. We are repeatedly told that people are going online to do their banking, but telecommunications in large parts of County Clare are not adequate to allow online banking either through Internet or phone coverage. What is the role of section 10 of the Act?

We have such a credit union sector in Ireland. One of the problems I have been contacted about is that credit unions must hold their money in banks, which means they must suffer negative interest rates. Let us consider a situation where the regime, legal or otherwise, allowed the credit unions to invest in housing stock or put their money to use for social good, while also obtaining a dividend for doing so. This would be done in a context where the funds would be properly secured. I am not suggesting credit unions be allowed to give out money willy-nilly without proper security and repeat the mistakes of the past. Great scope exists to do something in that regard. I will leave some time for Deputy Fitzmaurice. I would appreciate if the Minister would answer those questions.

Section 10 of the Act does, I believe, lay down criteria regarding the operation of banks in Ireland, but it does not constrain those banks from making commercial decisions regarding their future and operations. That is what has happened in the case of NatWest Bank.

On the Deputy's second question, there is nothing to stop any individual credit union making money available for a loan for a purpose it deems worthy. We have provided guidance regarding how credit unions can work together to try to meet some of the demand to fund community and social housing. None of that, however, can get away from the reality that a consequence of the monetary policy in place to help us deal with the economic effects of Covid-19 is negative interest rates. As Deputy McNamara will understand, those rates in turn affect the cost of holding deposits for any financial institution.

Section 10 of the Act allows for a requirement to maintain a certain presence, including ATMs. We were told that Bank of Ireland would maintain an ATM in every town, yet the next day Clare FM contacted the bank and it stated that it would not maintain an ATM in Kilkee, Tulla or-----

I am sorry, but Deputy McNamara has run out of time.

I express my sympathy to those who have lost their jobs in Bank of Ireland and to people in rural Ireland. Many parts of my own area, including Dunmore, Ballyhaunis, Ballygar, Elphin and Strokestown, have no bank now. Ballyhaunis is a big town as we understand it in rural Ireland and it has no bank.

The banks are not going to come back and there is no point in saying Bank of Ireland is going to change. Will the Minister ask Bank of Ireland to be good enough to give the buildings it owns in rural areas to the community? We are going to seek a meeting on that. The Minister went to the banks in January and they do not give him much sustenance. Many contractors in the building sector are paying leases on machines and so on and there is no moratorium. Will the Minister seek one?

Will the Minister also change the regulations on reserves? The banks can now hold reserves of 8%, while the credit unions are being told they must maintain a reserve of 10%. For whatever reason, the credit unions will provide banking services for the ordinary Joe soap. I ask the Minister to bring in some incentive for the ATMs that we have because many towns will be left high and dry otherwise. I ask the Minister to answer those three questions.

I will follow up on the point the Deputy put to me regarding the use of buildings owned by Bank of Ireland. I understand, however, that more of these buildings are leased than we might initially think. The Deputy makes a practical suggestion that I will be glad to follow up and get back to him on. The Deputy also asked about setting capital reserve requirements for banks and credit unions.

I do not have that power. It correctly sits with our regulator. The Deputy has just made a sensible and practical contribution, but if ever I wanted a reminder as to why politicians should not set the requirements for how much capital banks hold, a function that should sit with a country's central bank, many of the contributions I have heard from other Opposition Deputies during the debate remind me why these decisions must sit with our regulator.

On the question regarding leasing arrangements for equipment for contractors, I accept that the Deputy will differ. If he gives me a specific example of the equipment to which he refers, I will follow up on it and revert to him. I have a great deal of engagement with our banks and check where we are with these issues through the Central Bank and the information and data it makes available to me. Many of the measurements I have available to me indicate that the forbearance being made available on a case-by-case basis through our banks, combined with the support the Government is making available, is dealing with, or helping to deal with, many of the difficulties the Deputy referred to.

I thank the Minister.

The Deputy raised a specific issue relating to equipment. If he gives me the details of that example, I will ensure he gets an answer.

The Dáil adjourned at 8.32 p.m. until 10 a.m. on Thursday, 4 March 2021.