Public Business. - National Bank Transfer Bill, 1966: Second Stage.

Question proposed: "That the Bill be now read a Second Time".

The purpose of this legislation is to facilitate the proposed transfer to a new Irish company, the National Bank of Ireland Limited, of the Irish business of the National Bank and to provide for certain exemptions from stamp duty on the transactions.

These two companies signed an agreement on 20th January, 1966 providing for the sale to the new Irish company as a going concern as from 31st December, 1965 of all of the undertaking attributable to the business carried on in 135 branches in the State and in Northern Ireland comprising about two-thirds of the bank's total business.

The National Bank was established in 1835 by Daniel O'Connell, its first governor, to provide a banking network in Ireland. In 1854 an office was opened in London to provide the bank with direct access to the London money market and membership of the London Clearing House. This office became the head office and registered office in 1882 when the company was incorporated under English Companies Acts. Other branches were opened in England and Wales mainly in centres where customers of Irish birth and descent could be served.

The National Bank is essentially an Irish Bank but its legal status is that of an English company. In recent years it had become apparent to the bank that this situation was becoming increasingly difficult to reconcile with present day requirements. The bank, as a London clearing bank, is obliged to maintain liquidity ratios laid down by the British authorities which are not necessarily appropriate to its business in this country. The differences between financial and business conditions here and in Britain also affect the bank's day-to-day business. The development of the Irish economy in recent years also makes it increasingly desirable that banking business within the State should be more directly under Irish control. For these reasons the Dublin and London boards of the bank had for some time been exploring ways and means of bringing about a division of the bank, so that separate organisations for the two sections could be formed.

The arrangements provide for the purchase by the Bank of Ireland of all the share capital of the new Irish company after the business has been transferred to it and the acquisition by the National Commercial Bank of Scotland of the share capital of the reconstituted National Bank which will retain the business in England and Wales. Agreements to this effect have been entered into by the banks concerned. The new Irish company will continue as a separate entity but will be a member of the Bank of Ireland group. The consideration for the acquisition by the Bank of Ireland of the share capital of this company is £12.2 million, that is, £6.2 million in cash and £6 million in a new issue of Bank of Ireland loan stock. The Scottish Bank will pay £4.75 million for the share capital of the reconstituted National Bank. Total payments to the bank's existing shareholders will thus be £16.95 million. Nearly two-thirds of this amount will be paid to residents of the State.

An internationally known firm of Chartered Accountants, Messrs Cooper Brothers & Company of London, were retained at the request of the boards of the three banks concerned to place a value on the shares. For this purpose the firm were given access to the accounts, and all other information required by them, including details of earnings, assets and all reserves together with an up-to-date valuation of the bank's premises made by Messrs Jones, Lang, Wootten, chartered surveyors of London and Dublin. Messrs Cooper Brothers considered that a price of 56s. 6d. for each share of 10/-was fair and reasonable. Their valuation was made available to the joint Irish and English auditors of the National Bank and they, in turn, considered the price fair and reasonable.

The scheme of arrangement, prepared under the English Companies Acts, was approved by over 90 per cent of the shareholders at a general meeting of the company held in London on 24th February, 1966. An order of the High Court in London sanctioning the scheme will be necessary before it becomes effective. The scheme is also expressly conditional on the enactment of legislation in this country, substantially in the form of the Bill now before the Seanad.

The Government support the proposal to transfer control of a significant part of Irish banking business from Britain to this country. This change is in the public interest. The implementation of official credit policy to suit the requirements of this country will be facilitated. The proposals should also help in the rationalisation of Irish banking and lead to a more economic and efficient service for the community. Finally, the Irish Exchequer will benefit because profits formerly assessed to tax in Britain will in future be assessed to tax here.

Since the early 1960s the rapid rate of growth in the economy and the increase in external trade has encouraged foreign bankers to take a more active interest in the country. Some overseas banks have opened offices in Dublin. The Northern Bank has been taken over by the Midland Bank and a number of merchant banks are now operating here. The Central Bank, in its report for 1964-65, drew attention to this extension by external banks and other financial institutions of their activities to this country and to the undesirability of any substantial growth of external participation and control of Irish banking activities. The transfer of the control of the Irish business of the National Bank is a welcome reversal of this trend.

In the course of the Dáil debates on the Bill, some Deputies appeared to have doubts as to the need for the new banking company in this country. This is, of course, necessary if the Irish part of the undertaking is to become a separate entity registered under Irish law and subject to Irish control. Without the new company the proposed acquisition by the Bank of Ireland of the transferred Irish business would have to be effected by a direct merger with the Bank of Ireland and the National Bank business in this country would then lose its separate identity. The position is entirely different in Britain because the National Bank will continue to operate there, as at present, without any change in its legal status. The company will lose its Irish business and its share capital will be acquired by the National Commercial Bank of Scotland but these changes alone do not require legislation in Britain.

An alternative possibility considered by the bank was the establishment of a wholly-owned Irish subsidiary company controlled from London but this was rejected by the bank as impracticable and inadequate. While such an arrangement would have some of the advantages of the proposed scheme and would solve some of the problems inherent in the present situation, it would not have been favoured by the Government because of the provision for the maintenance of control from London.

The Bill provides, among other things, for the transfer from the National Bank to the National Bank of Ireland of accounts of customers, of securities held by the bank for loans and advances as well as securities held for safe keeping. It also provides for the transfer of staff and the continuity of their pension rights. The main problem relates to the transfer of secured accounts without disturbing existing priorities where, for example, securities are shared by different parties. In the case of overdrawn accounts it would be necessary, in the absence of legislation, to obtain the consent of individual customers to the transfer of accounts and also agreements or letters of consent to the transfer of any securities so as to make them available to cover advances by the new bank.

A stamp duty liability would arise in an artificial way on the arrangement to transfer credit and debit accounts. There is no provision for setting one off against the other. In the circumstances, the charging of duty on the gross amount of loans and advances would not be justified and provision for the exemption is included in the Bill. These considerations do not apply to conveyances of real property and a duty estimated at over £100,000 will be charged on such conveyances. This is based on a valuation of £3½ million for the Irish premises of the bank.

At the final stage in the Dáil, I was asked to clarify in the Seanad the position in regard to the transfer of the appropriate share of the existing pensions funds. The amount of the assets to be transferred will be calculated on an actuarial basis. As far as can be estimated at this stage the new Irish pensions funds will receive about £1.8 million from the existing pension funds amounting to £2.6 million, that is nearly 70 per cent of these funds.

The Bill, if enacted, will not become effective until an order is made by me. This procedure is necessary so as to ensure that the Act will not come into operation unless the scheme of arrangement, which has been approved by the shareholders, is sanctioned by the High Court in London. The petition to the court to sanction the scheme will be heard on the 14th of this month and it has been represented to me that, since the scheme is expressed to be conditional on the enactment of legislation in this country, the court may well decide to defer consideration of the application unless the legislation has been passed by that date. I have also been advised that, because of certain provisions in the British Finance Act, 1965, relating to corporation profits tax, due to come into operation on 6th April, 1966, it is essential, if the scheme is to be implemented, that the transfer of the business be completed by the end of the month. This requires that the scheme be sanctioned by the court and the legislation enacted at a very early date. It these circumstances, it was necessary to proceed with this enabling legislation in advance of the shareholders' meeting and of the British High Court decision on the application.

I must say I am somewhat unhappy about this Bill, and have been so since I first saw it (1) because the reasons given for the Government's support to this merger are so unconvincing; (2) because the structure of Irish banking that emerges from this transaction appears somewhat unbalanced; and (3) because this take-over has been carried out without the shareholders concerned knowing the value of what they are selling. The Minister has said that the take-over originates from a feeling on the part of the National Bank that its position, bridging the two countries, was becoming unsatisfactory, that it was obliged to maintain liquidity ratios laid down by the British authorities which are not necessarily appropriate to its business in this country and from a feeling that the banking business within this State should more directly be under Irish control. Because of this, the Dublin and London Boards of the National Bank have for some time been exploring ways and means of bringing about a division of the bank so that separate organisations for the two sections could be formed.

That seems eminently reasonable. One would expect it to be followed by the steps the Board of the bank thought of taking with a view to securing the necessary division of the bank but, instead, there follows the quite irrelevant statement by the Minister:

The arrangements provide for the purchase by the Bank of Ireland of all the share capital of the new Irish company...

This is a complete non sequitur. I can see good reasons for dividing the National Bank—and there are many ways in which it could be done—but that it could divide itself up suggests a poverty of imagination which I do not feel does credit to the intelligence of the directors of the National Bank.

The Minister gave four reasons for Government support for this measure, the first being that it involves a transfer of control of a significant part of Irish banking business from Britain to this country. The transfer of control of the Irish section of the National Bank could be achieved in a number of ways. It could be achieved—and this was done in relation to a large company not long ago—by transferring the head offices of the company to this country. There may be complications and difficulties about this but it is not impossible. When two-thirds of the shareholders are Irish, the company could become an Irish one. There may be difficulties of which I am not aware, but it is a theoretical possibility. There is the possibility of establishing a wholly-owned subsidiary. These the Minister dismisses on the grounds of not being statutory and of still having London control. I am not quite clear what kind of control the Minister is worrying about.

There is one detailed reference to the unsatisfactory character of the present situation, the liquidity ratios. If the bank cannot be divided up in this way, then the transfer of liquidity ratios in the two countries could be solved without difficulty. The Dublin Board of the National Bank has, subject to that difficulty, been able to run the affairs of the National Bank in Ireland in the interests of this country without any difficulty over the years, even though there has been control in London. A sub-division of the bank, therefore, would have got over this difficulty about liquidity ratios and the theoretical control in London and if their shareholders are Irish and their Dublin Board has shown itself well able to look after the interests of this country as far as the affairs of the National Bank are concerned, that could have been achieved.

It is not clear that it is necessary to sell the Irish half of the bank to somebody to secure this objective. The bank could have sold the Irish section of the bank to its own shareholders in some form. This type of transaction has been carried out before when companies are divided. It could simply have divided the bank into two sections. Many methods could have been adopted. The implied suggestion that the only way the National Bank could be divided was by selling the great majority of the bank to somebody else is extremely naive and unconvincing. I do not think the Minister can expect us to take it at its face value.

The Minister said, in the second place, that it would facilitate the implementation of a credit policy. This would have been achieved if the National Bank divided itself up and sold the Irish business to its Irish shareholders and taken action of that kind. In order to achieve the implementation of a credit policy here, it is in no way necessary to sell Irish business to another Irish bank.

The third reason given must surely be tongue in cheek, in view of what the Minister said subsequently. He said:

"The proposals should also help in the rationalisation of Irish banking and lead to a more economic and efficient service for the community".

That is a very fine concept. A very good case for the rationalisation of Irish banking was made in 1958 by the Secretary of the Minister's Department as we can see at paragraph 15 (3), Chapter 3, of Economic Development, 1958, when he said:

While a 30 per cent ratio is a minimum with banking organised as at present, there may be some scope for lowering the ratio and freeing additional resources for domestic development by the strengthening of banking organisation through bank amalgamations.

He went on to say "amalgamations should be followed by rationalisations as they would tend in any event towards lowering bank lending rates as a result of the elimination of redundant branches and the reduction of overhead costs generally". That policy was advocated by the Secretary of the Minister's Department in paragraph 15 (3) of Chapter III of Economic Development in 1958. It is an eminently logical policy. There may be certain objections to it but it makes sense. This particular banking amalgamation that is taking place is one which, according to the Minister in the Dáil debate in columns 181 and 182, involves complete security of employment for existing employees, no redundancy for anyone, and much greater opportunities for promotion, and he assured the Dáil that there was an intention to maintain existing branches of each one of them.

If that is rationalisation it is a new meaning of the word which I have never come across before and directly contrary to the complete rationalisation suggestion in the economic development document. It is, in fact, almost derationalisation. That this is the settled policy of Irish banks in regard to amalgamation is already evidenced by past experience. The Bank of Ireland took over, eight years ago, the Hibernian Bank. There was no question there of rationalisation. Far from closing branches anywhere, even where there were two beside each other, the policy adopted by the Bank of Ireland was, rather astonishingly, to expand the Hibernian Bank more rapidly than the Bank of Ireland. They opened more branches of the Hibernian Bank than they did of the Bank of Ireland. The reason suggested for that has been that it was thought necessary to preserve the morale of the staff of the Hibernian Bank and to assure them that the Bank of Ireland would have no effect on the expansion of their bank. The Bank of Ireland's concentration on the expansion of the Hibernian Bank is positive derationalisation.

No doubt the same policy will be adopted here. There may be good reasons for this, among them to provide security for the staffs, but for the Minister to talk about this as rationalisation and increased efficiency carries no conviction whatsoever. Unless he is in a position to tell us that there is some other secret form of rationalisation going to take place other than the ones he has specifically excluded we do not need to take this very seriously.

This whole problem of overbanking here is a serious one, as Mr. Whitaker pointed out. You can justify a competitive banking system if there is competition, but there is of course no competition in lending rates—even less than in Britain where there is some competition and some advantages of the competitive system. I am not aware of anybody who secures a better rate from one Irish bank than from another. The operation of the cartel is maintained to a perfect degree. Therefore, you do not have in practice competition, but you do have a duplication of branches on a very extensive scale because of the fact that, owing to the lack of competition in advance rates, profits can be maintained at such a level that it leads to an excessive expansion of bank premises. This is a common economic principle applied also to airlines in their competitive services across the Atlantic where they agree to fix rates and there is no control over capacity. They put on more and more services until the load factor falls to an uneconomic level. You have here, too, the essentially undesirable feature of fixed rates and no control over capacity. I wonder what are the circumstances in which it was thought desirable that competition, which in other areas is governed by the Fair Trade Commission, should not apply at all in this area in view of the evident disadvantages of lack of competition in banking to which the Secretary of the Minister's Department has drawn attention.

You can have a case for competition between independent banking groups perhaps even with fixed interest rates, because it gives people a choice of banks. Even if you do not have competitive rates there is some case for having a number of different banks, giving people a choice. But there is no case for a system in which you eliminate choice of banks effectively by permitting amalgamation of a number into one but get no rationalisation out of it and you still have a system of fixed advanced rates. You have the elimination of choice of North of Ireland bank customers, who have now to turn over to a bank with which a number of them, for perhaps very good reasons, did not want to do business previously. They are given no choice in the matter. There are many benefits by way of rationalisation, but the Minister assured us that there was no thought of any form of economic rationalisation or applying a certain type of economies even though he used the word "rationalisation" in his opening remarks.

The only good reason I could find, and one which naturally would appeal to the Minister, for what is being done is that the profits could be taxed here. This seems to be the real reason for the Government's support, on a short term basis without any thought of a Government banking policy, which they do not seem to have. As far as I can estimate it, what the Minister can get in taxation in this year might exceed £1 million, and one can understand the Minister, particularly on the eve of the Ides of March, licking his lips at the prospect of an extra million pounds. But it is not essential for the Irish section of the National Bank to be sold to another bank in order that the Minister could get his hands on this million pounds. There are other ways in which this could have been done.

The Minister's arguments are, therefor, very unconvincing. There may be good arguments for this—I do not rule that out. I am only probing at this stage, but it seems extraordinary that the Minister should put forward such weak arguments. If there are good ones we should like to hear them. The one thing running through all this matter is that the Government has no policy about banking. It seems to have faced this situation as it happened and said "there is a million quid coming in this, so this is our policy". Surely the Government ought to have a policy on banking. It could believe in the rationalisation of the banking system as recommended by the Secretary of the Department eight years ago, or, alternatively, could take the view that this would be undesirable and that the present system should be preserved, or that some limited rationalisation should take place. What is the Government's view on the position of banking in Ireland? We have no statement of policy on this other than the purely ad hoc statement that it welcomes these developments for reasons most of which seem very unconvincing.

If rationalisation is needed and if that were the Government's policy, which does not appear from the Minister's statement, is this, in fact, the best possible rationalisation? Looking at the structure of Irish banking, one might well wonder about that. This measure will put four banks together into one group and as far as I calculate it they will represent 42 per cent of Irish banking taking account of the English business of the National Bank which is being hived off and which will not remain a part of our banking structure as hitherto. Twenty-four per cent of banking will be in the hands of two northern banks each of which in turn is owned by English banks. Therefore, all that remains against this massive group will be three smaller banks between them accounting for 34 per cent—the remaining independent Irish banks. Is this the best possible structure for banking in Ireland—a quarter controlled from outside either from the north or from England, 42 per cent controlled by one massive group, and the remaining 34 per cent divided between three banks, the largest of which is quite a substantial bank? I would have thought that if the Government had a policy on banking, which it never had, it might have considered that the proper policy would be to have fewer banks but to have a number of strong banking groups competing with each other to provide some competition. We do not need nine banks. We could do with fewer, but we would need at least three strong groups in the Republic, led by the Bank of Ireland, the National Bank and the Munster and Leinster Bank. The possibility of that reasonably rational structure of three banks about the same size with some others already taken over by the Bank of Ireland and one or two others which may well be taken over would give you three groups in a rationally strong structure and maintain some element of competition. But in the absence of any Government policy something different has happened and appears to be welcomed by the Government without much thought as to whether it is the best method, but simply because of the million pounds extra taxation they hope to get.

I should like to turn from that to another matter—whether, in fact, this transaction is fair to the shareholders who are being bought out. We have been told that a firm of accountants have examined the business and reported that the price is a fair price. We do not know on what basis they worked. We do not know whether they were primarily concerned with the exact value or with the returns achieved. The shareholders do not know. They have been told that a firm of accountants think this is a good price, without knowing what approach was adopted in relation to the calculation.

It may be that the figure of £16.2 million paid to the National Bank as a whole by the two purchasing banks represents a fair value of the assets and the actual break-up value of the bank. This is possible. A recent study of the value of the banks in Ireland and their assets was made on behalf of a firm of Irish stockbrokers with whom I am associated. They worked on the assumption that the premises of the bank were worth about 2½ times the value of the balance sheets. That assumption seems now to have been over-conservative in the light of the Minister's figures.

He told us that the Irish premises of the National Bank are worth £3½ million, whereas the total value of all premises in Ireland and Britain is £1.9 million on the balance sheet. If you apply the 2½ times formula, that would give £4½ million for the whole of the premises of the National Bank in both countries. We know that the Irish premises are worth £3½ million and that leaves only £1 million in respect of the premises in England. This seems very low indeed. In other words, this would be an independent, approximate assessment of the assets of the National Bank, which works out at £16.2 million. Of course, this is an unduly conservative figure for the value of the premises. However, £16.2 million may not be very far out in relation to the value of the assets.

There is another way of looking at banks or comprehensive businesses, that is, to consider the earnings. Banks have naturally a monopoly. The fact that no Irish bank has been started in the last century, virtually not since the Munster and Leinster Bank took over the Munster Bank, when it went into liquidation in 1885, shows the strength of that business and that monopoly. That strength is maintained by the banks who have not encouraged competition from outside. This enables the banks to earn a relatively high return on their capital. We do not know what they earn because the Government, in their wisdom, permit the banks to disclose neither their assets nor their profits. It is rather difficult to assess the returns when you have not got either of those two facts.

We have, however, something to go on and we can make some rough assessment as to what the profits of the National Bank might be. Their published profits last year were £456,000, after tax. While I have not got the exact tax rate applicable today, it is suggested that before tax, the disclosed profits would be from £850,000 to £900,000. We know that banks' profits, as disclosed, are only a portion of their total profits. It is believed in various circles in England that the profits of the National Bank have been under-disclosed to a much greater extent than most other commercial banks. Several estimates have been made in Britain suggesting that the true profits may be 2.9 times the disclosed profits. The study carried out here on the Irish banking system, to which I have already referred, arrived, independently, at a figure of 2.85 times. If those two independent assessments, which seem to arrive at nearly the same figure, are correct, it would mean that the true profits, before tax, would be £2½ million to £2¾ million last year. That is a pretty good return on £16.2 million. It is between 15 per cent and 16½ per cent.

Of course, we do not know if those figures are correct. They are private assessments made in the absence of any published information. The shareholders do not know what the true profits are and, therefore, they are not in a position to evaluate the price offered. This is an unfortunate feature of this transaction. The two parties who decided ultimately to take this action were the directors of the Bank of Ireland, not the shareholders, who were involved only very indirectly by agreeing to provide additional capital which was then used by the Bank of Ireland, and ultimately the shareholders of the National Bank. The directors of the Bank of Ireland decided to buy and the shareholders of the National Bank are being asked to sell. The directors of the Bank of Ireland have a very good idea of the value of what they are buying. They are bankers. They know just how their own true accounts relate to the published accounts. They know, not only their own figures but those of two others, the National City Bank and the Hibernian Bank. They could make an expert evaluation of the true profits and the true assets of the bank.

In fact, they would know what they were doing but the other party to the transaction, the shareholders of the National Bank, have no information on and no estimate of what it is worth. They are told, on the word of a firm of accountants, that it a fair price. There could be several different views as to what is a fair price. One does not always take somebody else's word of what is a fair price. One likes to have some knowledge of it.

It seems most unfortunate that this kind of situation can exist. There may be many shareholders of the National Bank who believe that the true profits and assets of their bank are incorrect and under-estimate them. While it is believed in financial circles in London that the real profits are about 2.9 times the disclosed profits, that is not a view held by everybody, although it is held by expert stockbrokers. There may be shareholders who think that if the profits are twice as big as disclosed, that would be the size of it. Yet, not knowing what the profits and assets are, those people have been asked on faith to accept a price for their property.

This seems to be wrong. It is the function of the State to protect shareholders against this kind of situation. The State does this in other areas outside banking by taking many stringent precautions to ensure that full and true disclosures are made. In banking, the State connives at the failure of the banks to give any information on the true value of the assets or the true profits. This system is one that has been open to much criticism in the past. The minority report of the Jenkinson Committee in Britain recommended that it should be changed. I know it is a view of banking directors in this city that it serves no useful purpose and is no longer necessary. The directors of the bank who are buying know the true value of what they are taking over but the people who are selling have not the true value of the property they are selling.

It seems to me that this whole question of disclosures by banks needs to be looked at again. I raised this matter last July on the debate on the Finance Act and pointed out that there can be no ground for not disclosing the assets of the banks. I was inclined to the view then that there may have been a case for not disclosing the full hidden assets of the banks. The case has always been made that if the depositors and the shareholders knew what the hidden assets were, they might find them declared when values were falling and their confidence would be shaken. That may have been valid a century ago but it is not true today when banks are in a strong position. I am inclined to the view that the arguments for not disclosing the hidden assets are not substantial now and I believe that in present circumstances, they should be disclosed.

But there is no case whatever for not disclosing the true profit position. I fail to understand how any depositor in a bank could have his confidence in the security of his money shaken by knowing that the bank's profits were twice as big as he thought they were. He certainly could not feel his money was insecure by knowing that the profits were larger. There is no case for the non-disclosure of profits. The continued failure of the Government to introduce amending legislation has left the shareholders of the National Bank open to a take-over bid of a kind which they are not in a position to evaluate. They cannot know. This is part of a general pattern of lack of information about banking. The statements of bank chairmen, including that of the National Bank, have not been anything like as informative as they should be. The chairmen take a lot of time to discuss the national economy, on which their views and opinions may be of value, but one feels that it would be much better for their shareholders if they spent at least some of the time talking about banking. Moreover, when they do refer to banking, the type of information they give is by no means accurate. I should like to quote a comment by the chairman of one bank in 1963 as to how that bank was doing and to compare it with the actual truth as a shareholder could find out but only by obtaining the reports of all the other banks and comparing them. This chairman said:

Resources increased during the year by almost £ ... and the total is a record figure in the history of the bank. The rate of increase has slackened in comparison with recent years, but it is not out of keeping with the general trend.

That is, the description by a bank chairman of a rise in profits of his bank in 1963 when that bank's profits in that year were lower than any other quoted bank. The shareholders in that bank had no means of knowing that unless they obtained the reports of all the other banks and compared them. They were misled by the chairman of that bank as to the true position. Shareholders in banks do not get anything like the information which shareholders in other companies get because the Government do not require that they should have this information.

We also had the case of a bank last year publishing a balance sheet and accounts, with no comparative figures at all for the previous year, but the excuse given was that they had to consolidate their accounts because of legislative requirements. So, the shareholders could make no evaluation of how their bank had done for that year as compared with the previous year. The Bank of Ireland, which had always disclosed the basis of valuation of investment in its subsidiary banks, used the Companies Act, 1963—which was intended to increase disclosure—to withhold this particular bit of information so that the shareholders now in the Bank of Ireland are unaware of the basis of valuation of investments in its subsidiaries, which they had always had before. The Bank of Ireland published consolidated accounts which were completely uninterpretable because the transactions are so recorded that nobody could possibly work out the return between the Bank of Ireland and its subsidiaries, although the purpose of consolidation accounts is to enable that to be done.

Therefore, there are many matters which require attention. The time has come, after nearly 30 years in fact, for the whole question of banking to be reviewed. We need another Banking Commission at this stage. There are also other matters which affect the public interest—the size of the margin between deposit and bank rates. We know the profits are much higher than are disclosed. Should advance rates be fixed? If in Northern Ireland the question of whether this bank profit margin is too high is being examined by a committee, is this not something we, too, should look at? I think that is what has happened in this case, and the position arrived at when shareholders are being asked to sell something they do not know the value of. Banking is an extremely difficult and complex business and, of course, there are problems of confidence. I think the Minister should give serious consideration to the question of another Banking Commission at this stage. In the meantime, in this particular instance, I think the Government ought to require full disclosure of information before endorsing this transaction of the shareholders and particularly of the Irish shareholders who comprise, I think, 62 per cent of the total. The Government have an obligation to protect the Irish shareholders here and ensure at least that the Irish shareholders know what they are doing.

Finally, I think the Government should state its policy on commercial banking, on amalgamations, rationalisation and so on. There appears to be complete confusion on that; such as the idea that if you put two banks together and do not do anything to make them more efficient—as in the case of the Hibernian Bank—they do rationalise for domestic reasons. The Government should have a policy in relation to this. Surely it is something on which the Government ought to have a view. The banking system in Ireland is of enormous importance to us. They do not seem to know what is best for the benefit of the country.

I have explained that I am not happy about the Bill. The Minister has not made a case for it, except in regard to the extra tax he is to get. The structure of banking in regard to this is unbalanced. The shareholders' interest has not been protected. It is the duty of the Legislature so to ensure. This is not good enough and I think the Minister really should give us more information than we have had for the reason for this. He should turn his attention to the whole question of banking in Ireland and banking policy, which has not been looked at for 30 years, during which time this country has changed a lot and made great progress.

I listened with the greatest attention to the very compelling speech of Senator FitzGerald. I had, in fact, noted two of the points in the Minister's opening remarks which seemed to me to call for some kind of criticism or amplification. Both of these have been mentioned by Senator FitzGerald. The first is the sentence in which the Minister told us the proposals were—

For the rationalisation of Irish banking and to lead to a more economic and efficient service for the community.

As has been very well demonstrated by Senator FitzGerald, we have not been shown that these proposals do in any way either rationalise Irish banking or lead to a more economic and efficient service for the community.

The question of confidence has been mentioned. It always strikes me, when we see the palatial head offices of banks or palatial branch offices, that the palatial nature of these buildings is based upon a concept of public confidence which really is a century out of date. There was a time, I suppose, when you did not feel it was safe to put your money in a bank unless the bank was full of marble, enormous pillars and so on. This seems to me to be no longer necessary. Modern society would not have its banks and insurance offices on its main streets. The object of a main commercial street ought really to be for the purposes of having display. It seems to me quite wrong to have all our large shops on the main streets but the display of the banks is simply a display of marble, pillars and so on. You do not even see pound notes in the window tempting you to come in and acquire a few. In other words, a great deal of the money of our banking system is spent in a wasteful way—is spent on the display of stone, marble and mortar.

Furthermore, there is, quite clearly, unnecessary duplication of these services, not merely duplication—that is too mild a word—but multiplication. The suburb in which I live, Terenure, is the pattern of many a small town in that it has three or four banks, different banks, each one vying with the other for the purpose of looking big and important. This would appear to be irrational, uneconomic, and inefficient, from the community point of view, which was the point of view invoked by the Minister in introducing this Bill. He said:

The implementation of official credit policy to suit the requirements of this country will be facilitated.

I should like to ask who, in fact, does really control credit in our country. Have we as a community a major say in the control of credit? Have the Central Bank, or have the Government? Do we not recognise that in practice, the first obligation of the banks is to the shareholders, and that they issue credit not in terms of the community interest but in terms of the monetary interest which may accrue to their shareholders? It may well be demonstrably better for them to invest abroad than at home, and to issue credit in a way that might be deleterious to the country.

I cannot help regretting that the former Senator, Mr. James Hickey, is not still with us in this House, because he would have quite a lot more to say on the question of credit than I. I would not go so far as he goes, but it seems to me that the banks are, in fact, trading on the national credit, that is the credit of the nation. It is the whole industrial and commercial process of the nation that gives the banks the control of credit they have. The effective control of our banking and credit forming mechanism is not in Ireland at all, whatever they may be called—the National Bank, the Bank of Ireland, the National City Bank.

Senator FitzGerald said that practically no Irish bank was founded in the last century. There was the National Land Bank which became the National City Bank and was swallowed by the Bank of Ireland. That appears to be the tendency. I support what Senator FitzGerald said, that what we really require is not an ad hoc acceptance of a special circumstance, but a much bolder banking policy, something far closer to a control of the use of the credit that is produced by the community as a whole, or in the phrase used by Senator FitzGerald a “thought-out Government banking policy”. As I see it, we have not got that and the Minister does not seem to consider that it is any responsibility of his or of the Government.

I am afraid I was quite staggered, in my innocence, by the figures mentioned by Senator FitzGerald. He said quite calmly that the true profits of the banks are something between 2.85 and 2.9 times the disclosed profits.

Only in the case of the National Bank.

I was wondering whether there was some similar disparity in the case of the other banks, or are all the other banks strictly accurate in their disclosures?

The ordinary income tax payer in the country who failed to disclose his entire income might find himself in trouble, but apparently it is possible for a banking concern not to disclose the full and true extent of its profits.

I should not like to mislead the Senator. The non-disclosure is to the public. There is no reason to believe that the bank does not disclose its full profits to the Revenue Commissioners.

The point is that "the public" apparently includes the people who theoretically are the owners, the capitalists in the banking system, the shareholders. I do not think the word "dishonest" is too strong in this matter. I believe there is a responsibility on the Government not only to underline this fact, but also to do something about it. Therefore, I support what the Senator has said about there being a far greater degree of Government responsibility in the matter of banking policy and banking investment than has been displayed so far by any Government policy. I should like to see something more than a mere ad hoc Bill which suits the convenience of an individual set of circumstances.

The more one hears and reads about this Bill, the more curious and interesting the Bill becomes. The Minister's speech today contains a number of remarkable statements with which I will deal later. One of the first things that amazed me was that here we have a transaction taking place between two private concerns, the National Bank of Ireland Ltd., and the Bank of Ireland, and the old National Bank with its headquarters in London. I do not understand how it is that if they want to effect certain things by means of legislation, they did not have to introduce a Private Bill in the same way as other institutions which have effected changes in their constitutions have introduced Bills here from time to time. It may well be that they could not give themselves the exemption from stamp duty that is provided in this Bill, and that that is part of the reason why it is necessary for the Minister for Finance to introduce this Bill. I do not understand why the Minister takes upon himself the burden of introducing this Bill. Indeed, one wonders why it is necessary at all considering that a fairly substantial firm like Messrs Guinness divided themselves into two companies. They have an Irish head office and are registered as an Irish company.

They are a London registered company.

They are registered here as well as I understand the position. However, that is an aspect which the Minister might clarify for us. I look at this Bill from the viewpoint of the public. I am not a shareholder of the National Bank or any other bank. I am not connected with banking of any kind except coping with my overdraft.

This business of increasing takeovers and mergers is growing to such an extent that thinking members of the public are beginning to wonder where it will all end. Private businesses are being taken over daily. The Government are lending themselves to this merger. I am wondering whether the Government have lost sight of the Constitution which they themselves were instrumental in enacting.

There are contained in the Constitution—and it is no harm to call attention to them from time to time— what are called directive principles of social policy which are laid down for the observance and guidance of the Legislature. Article 45 of the Constitution provides that the principles of social policy set forth are intended for the general guidance of the Oireachtas. Some people may think that this was a kind of pious catchpenny phrase to get the electorate to pass the Constitution, and some people may think that it still has a certain validity.

The Senator should stick to the banks.

The Senator will bear with me. Perhaps he is getting hungry and we should adjourn for tea.

The Senator is tempting me to follow that path, too.

Business suspended at 6 o'clock and resumed at 7.15 p.m.

Before the break, I was calling the attention of the House to the directive policies on social policy contained in the Constitution. They are very relevant to a consideration of this Bill. In particular, I want to refer to paragraph (2) of Article 45, which provides:

2. The State shall, in particular, direct its policy towards securing

(ii) That the ownership and control of the material resources of the community may be so distributed amongst private individuals and the various classes as best to subserve the common good.

Sub-paragraph (iii) goes on to provide:

That, especially, the operation of free competition shall not be allowed so to develop as to result in the concentration of the ownership or control of essential commodities in a few individuals to the common detriment.

It seems to me that if we take these two paragraphs of Article 45, this particular Bill is orientated in the opposite direction to that which is pointed out by these directive principles.

There is no question here of trying to distribute property amongst private individuals. The State, in fact, in this Bill, is lending itself to a monopoly and the creation of a monopoly. The question this House and the country have to ask is: At what stage are we going to stop in the creation of these monopolies? It is very apt, at this particular juncture, to point out the danger which exists in relation to the growth of monopolies as a result of these takeovers that are going on in banks and in business. Eventually, of course, what it will mean is that there will be no competition. The facade of the National Bank of Ireland operating as a separate entity when, in reality, it is being controlled by the Bank of Ireland is a fraud which is being perpetrated on the public by the agency of this Bill.

It is extremely regrettable that the Government should lend themselves to something that is quite in conflict with the idea of a widespread distribution of property among as many people as possible and to the creation of a monopoly of this kind. As I understand the Bill, the shareholders who now own the National Bank in so far as it is located in this country will get their money and be gone. They will have no more interest in this form of asset which up to now was theirs as shareholders. Of course, the warning that has been given is being given in time. It is like the warning the Fine Gael Party gave about the buying up of land in this country by foreigners. There was a private Bill introduced in the Dáil to deal with this problem which was rejected by the Minister for Lands. There was a section introduced in the early part of the discussion of the Land Bill of unhappy memory which is the present Land Act of 1965 dealing with the control of buying of land by the Government, and that was rejected. When it came to the Report Stage the Government had had a change of heart and introduced amendments broadly along the lines of what had already been rejected on the Committee Stage of the Land Bill. Eventually, I suppose, they will stumble upon the idea that this particular type of monopolistic transaction is not good for the country, but a great deal of water will have flown under the bridges and a great deal of harm will have been done before, if they are allowed to continue very much longer in Government, the appropriate remedies are taken.

That is to me the fundamental objection to this Bill, but there are a number of queer things which the Bill is seeking to do and a number of strange observations have been made by the Minister for Finance in his Second Reading speech today. We have had complaints recently about advertisements for getting British experts to advise on Irish firms here. We have had somebody recently looking for a personnel consultant and they had to go to Britain for it. Here in this country we have lots and lots of competent auctioneers. Yet we find that when it comes to the valuation of the fixed assets of the National Bank, lo and behold we have the firm of Messrs. Jones, Lang and Wootten, chartered surveyors of London and, it is added, of Dublin. I would love to know how many people here in this House know of the firm of Messrs Jones, Lang and Wootten as chartered surveyors or as persons competent in the valuation of Irish property.

I am certain I have never seen, in the casual way one looks through auctioneering advertisements in the Saturday papers, the name of Messrs Jones, Lang and Wootten. The Irish shareholders in the National Bank are to be content with the valuation made by people who, in fact, know nothing at all about Irish property values. That is what is being foisted on the shareholders of the Bank of Ireland. I am quite certain that "and Dublin" has been added in to give it an Irish flavour. It is like the kind of thing Americans do on St. Patrick's Day with various dishes. They colour them green to give them an Irish appearance. This is very curious thing and I should like the Minister, when replying, to tell us what experience those people have and what are their qualifications with regard to the valuation of Irish property.

The Bill provides that it will not come into operation until an order is made by the Minister. The Minister, with remarkable frankness, indicates that the reason he has taken this power is that we have to await the decision of the High Court in London. That is a form of self-abnegation that I never thought a Republican Party would be guilty of or that any Irish Government would be guilty of. If it is necessary for this English-based bank to apply under the Companies Act, or whatever Acts they are applying under, to an English court for their approval, I should have thought that the English High Court would make this order and that it would not hold up the proceedings until such time as the national Parliament of a neighbouring State had passed a statute. That certainly is a new one for this House and we ought to appreciate what we are doing. Not alone that, but there is a time limit imposed, namely the 31st March, by which the Parliament of this country must pass an Act in order to facilitate a business transaction, which is to be the subject of approval by an English High Court judge.

That is not a proper assertion of our national sovereignty. It is derogatory of this assembly and of the Dáil that we, as a national Parliament, should be put in a position in which we must enact legislation to suit a business transaction between the directors of the National Bank in London and the Bank of Ireland in this country. It is a remarkable admission by the Minister for Finance. Not only have we gone that far but we then, in a queer kind of way, turn upon the English Government and say to them: "You may have enacted your Finance Acts dealing with corporation profits tax but if we can do it we will cheat you out of the income tax that you are entitled to." The Minister tells us that he has been advised, because of certain provisions in the Finance Act, 1965, relating to corporation profits tax due to come into operation on the 6th April, 1966, it is essential, if the scheme is to be implemented, that the transfer of the business be completed before the end of the month.

This Parliament is being asked — we better be quite clear about what we are being asked to do — to rush through a piece of legislation for the purpose of ensuring that the corporation profits tax, properly payable under British law to the Inland Revenue Commissioners in England, will not be paid. That may be all right as a business deal between two firms but I would have thought that the comity of nations would require that this Legislature would not lend itself to that kind of activity. We would be very critical of a British Government that enacted legislation to deprive our Exchequer of what was their lawful due under existing income tax law. It seems to me to be a remarkable thing that a Government can lend itself to that kind of deal, which I can only describe as being shady.

The Minister for Finance referred to the fact that the bank, as it stood, before this proposed change-over, as a London clearing bank, was required to maintain liquidity ratios laid down by the British authorities which were not necessarily appropriate to its business in this country. That is an interesting observation because Fine Gael, in the last election in its document "Towards a Just Society" laid down, as one of the things which were necessary for the development of our economy, that there should be some control over the liquidity ratios maintained by our banks.

When that document was published the Taoiseach somewhere in Mayo—I have a distinct recollection it was in Mayo the speech was made—said that Fine Gael in their Just Society document were threatening to steal the deposits of the Irish farmers in the Irish banks. It seems now that what was being argued at that time, that the Government should have some say in regard to the liquidity ratios to be maintained by Irish banks, has penetrated and that our Central Bank has now some hand in that. Again, it looks as if the Government, in the encircling gloom in which we now live, stumble upon some aspects of a banking policy, as, indeed, they have stumbled on some aspects of an incomes policy which, of course, was rejected by the Taoiseach during the last election, and which he has now grappled to his soul with hoops of steel.

There is one final matter with which I should like to concern myself. I am sure members of the Labour panel who represent Labour interests will be concerned with it. I have some experience on the matter and I would like to satisfy myself about it. I refer to the section which deals with the transfer of staff. We had this before in relation to the transfer of staff from, first of all, the companies that operated independently of the Great Southern Railway, which was constituted by the 1926 Railway Act, and later on under the 1944 Transport Act and the 1950 and 1958 Great Northern Railway Act. In all those cases where the Legislature interfered with the existing contracts of people there were adequate provisions made to ensure that existing staff were transferred. The concern has always been that they would have the same conditions of service as those obtaining in their former employment.

Section 6 deals with this aspect of the merger. I am not altogether satisfied that there are as ample provisions contained here as were contained in the Railway Act, the Electricity Supply Act and a number of other Acts where the Legislature interfered with contractual rights. This section merely says:

Any officer, clerk or servant in the service or employment of the transferor in the State shall on the transfer date be transferred from the service or employment of the transferor to and become an officer, clerk or servant (as the case may be) of the transferee with the same rights and subject to the same obligations.

"With the same rights" is probably a phrase which is equivalent to the same terms and conditions of service. I should prefer to see the phrase which has been used in other legislation used in this because somebody may say that the Legislature was aware of what it was doing and used a different phrase in this Bill for a good reason. I should prefer that the same terms and conditions of service be repeated in this Bill. When I was reading this originally it occurred to me that, while if this bank was to be taken over, presumably for the purpose of rationalising banking, there was bound to be redundancy. Apparently from what Senator FitzGerald, and indeed from what the Minister, says there will be no such thing as rationalisation. But I should like an assurance that if there is redundancy the same rights clause in this Bill will not entitle the Bank of Ireland—which will become the new employers of these people—to say: "Under your old system you were liable to be dismissed at a month's notice; now we find we are closing down a branch here and a branch there, there is nothing in the Act to prevent us, you are redundant and out you go". I think it is desirable in case some of the staff of the National Bank do become redundant that they should be retired upon redundancy terms which would be no less favourable than those which have hitherto been granted by the Legislature, on numerous occasions, to transport employees.

These are two matters with which I should like the Parliamentary Secretary to deal because they may well affect the lives and well-being of a number of individuals. I should be very sorry to think that, in addition to having lent ourselves to these unacceptable principles, we should also have created hardship for individual employees of the present National Bank.

It is difficult to speak on this Bill without following some of the previous speakers up the various by-ways they have taken us. Senator O'Quigley asked us to consider this Bill against the background of the Constitution and Senator FitzGerald gave us a very interesting dissertation on the banking system. Whatever are the merits of these views and whatever are the merits of Senator FitzGerald's view on the banking system, I do not think this is the time to consider them, to go into them at any great length; although it might make an interesting debate on some future occasion.

The principal point which has been raised in this debate is the valuation of the assets of the bank, the proper valuation of the shares. We have been told that chartered surveyors gave their estimate of the valuation of the property and, for Senator O'Quigley's benefit, I might say that I am aware that Jones, Lang and Wootten have been operating in Dublin for some time past; their Dublin address is more than merely a nominal one.

It is a poor auctioneer who is not on the telephone.

At any rate, they are a reputable firm who have given a valuation but you also have a very reputable firm at the request of the three boards giving an estimate of the valuation of the assets of the bank. Presumably these chartered accountants——

Did they give an estimate of the assets or valuation of the bank, or an opinion as to whether the purchase price was correct? The shareholders were given no information.

It would not mean anything to the ordinary shareholder. The important thing is that these chartered accountants, who have expert knowledge, gave their opinion presumably, having taken everything into consideration, as to the value, the value of the assets and everything connected with the bank. As far as the average shareholder is concerned, that is much more important to him than to be told what the value of the assets is. It would not mean very much to him to know exactly what they are. The board of directors of the three companies asked for this, were given it and recommended it. After all, it is all very well to talk about the shareholders and to assume that the shareholders are in some way completely divorced or separated from the directors but the directors are the people whom the shareholders elected to look after their interests. When the board of directors of the companies recommended—the board of directors of the National Bank in this case—the transfer should take place that cannot be dismissed as valueless. The shareholders have placed their trust in the directors for years and, subsequent to this agreement, they showed their approval of what had been done by a very large majority. Although that may not be conclusive proof that what the directors did was right, it is certainly a very good indication that the shareholders are satisfied with what was done on their behalf.

The shareholders are made up— roughly speaking—of two different categories. There is the man in the street who merely buys shares, knows very little about banking business or knows little about business generally. He holds the shares, they give him a good yield and he is quite satisfied with them. No matter what information he had, it would not be of any use to him. The second class of shareholder of the bank—the second main class— would be institutions of various kinds and, in many cases, they would be in a position to assess, certainly with some knowledge, the value of the shares, the value of the business, what it is worth, what the shares should be worth, what the assets should be worth, and so on. I am quite sure they made their own investigations and are quite satisfied that this agreement was a good one. The fact that 90 per cent of the shareholders, which must include a very large proportion of both institutional holders and men in the street, approved is an indication that they were quite satisfied with what had been done.

The fact of the matter is that most people who hold shares are not particularly interested in what the assets are. They are not particularly interested— to a considerable extent—with what the exact profits are. What they are interested in is the yield, and that is 90 per cent of the interest of a shareholder or of a person who is buying shares or disposing of them. He is interested in what yield he gets out of the particular share.

How does the Senator define the word "yield"?

Yield is what he gets, as compared with what he pays for the share. If he pays £100 for so many shares and gets six per cent, that is the yield. He is interested in the assets of the company merely to the extent of whether they are substantial and satisfactory. He is interested in the profits of the company merely to the extent that he can be satisfied they are good profits regularly made, and otherwise that the shares are safe shares upon which he can depend.

Consequently, having satisfied himself, as any shareholder of the National Bank could satisfy himself without much difficulty and without any more information than is available at the moment, he is only interested then in the yield. The valuation of these shares from the point of view of the yield was very satisfactory. He could base his decision on whether he approves of this to a very large extent on the yield, and on that basis he is satisfied with this agreement. When Senator FitzGerald bewails the fact that the ordinary shareholder could not get all the information he wanted, I think it was an unreal criticism and an unreal complaint. This did not in any way prevent the shareholders from making up their minds as to whether they were satisfied with this agreement.

The second point mentioned in this debate was the question of rationalisation. We were told by Senator O'Quigley on the one hand, so far as I understood him, that he was in favour of rationalisation, and that he was concerned with the fact that possibly not enough was done about it. On the other hand, he went on to deal with the question of monopolies and was concerned with the situation created by this Bill, and with the fact that the take-over of this bank would lead to a monopoly. Of course, you cannot have it both ways. If you are in favour of rationalisation in a particular industry, the question of whether it will eventually become a complete monopoly is another matter. Certainly the more rationalisation you have, the nearer you get to monopoly.

The trouble in this case is that the more monopoly we get, the nearer we do not get to rationalisation.

That is another matter. In this case if people are in favour of rationalising the banks, cutting down the number of branches and the overheads, and getting a better service for the public, each step in that direction brings us nearer to monopoly. As Senator FitzGerald said, the element of lack of competition in the banks has been very pronounced for many years, and consequently although it is a problem, and something which may be deplored, and possibly a matter about which something should be done, it is not a problem which has been made substantially worse by this Bill. We cannot say that this is the occasion when we should call a halt, that it is the last straw.

Senator FitzGerald criticised the fact that the Government have not done far more to show in what way the banks should be rationalised. He said that the Government had not laid down guidelines, or programmes, or patterns, to show how the banks should be rationalised.

There is no reason at all why the Government should do something in regard to the banks that they have not done in regard to other industries. On more than one occasion, the Government have indicated the necessity for rationalisation in industry generally. They have offered to facilitate the rationalisation of industry so as to encourage a merger of the smaller firms that are not able to compete, and enable the bigger firms to export, and so on, but in no case have they done more than encourage them. Certainly in the footwear industry, there has been considerable rationalisation and to a lesser extent there has been rationalisation in a number of other industries. This has been done by the industries themselves. The Government have not stepped in and told the industries how they should do it. Indeed, I think there would be great resentment on the part of the industries concerned, and no doubt considerable complaints in both Houses of the Oireachtas, if the Government stepped in and tried to tell these industries their business, to tell them in what way exactly they should go about rationalisation. That being so, it appears to me that there is no case for the Government to step in and tell the banks exactly how they should rationalise their business, how many branches they should have in a particular town, or any other of the detailed mechanics of rationalisation.

The banking industry being of particular interest to the country, and because the banking system has been something of a monopoly up to now and one bank has not competed with another to any great extent, it may be that the time will come when the Government will have to do more than give encouragement towards rationalisation. It cannot be said that the position is so bad at this stage that it is necessary for the Government to step in and do something in this industry which it was not found necessary to do in any other industry.

We have had a very constructive and probing debate in the contributions made by Senator FitzGerald and the last speaker. There are just a few points to which I should like to advert. I should like to begin first with the title of the new company. It is to be the National Bank of Ireland. I should have thought that on this occasion the nation and the Government would have availed of the opportunity to honour one of the greatest Irishmen of all times—Daniel O'Connell, who founded this bank. If it is not too late, I should like to ask the Parliamentary Secretary to see whether it might be possible to ensure that Daniel O'Connell's contribution in this regard would be honoured, and also his contribution to Irish history and to the freedom we have here today.

Many of the issues raised here are of rather general concern to us. On the question of monopoly, we find that already the banking system is the largest one in the country. It will now have 42 per cent of the business of the State. I think that is a bit dangerous, and certainly getting to the point of giving credence to the saying that the banks and not the Government rule the country. I think it would have been far better if this bank had been kept separate, or alternatively, if it had been split in some way between the existing banks and not added to the one which is the largest in the country.

Again, of course, we must have a look at the aim held up by the Minister here, that is, that of rationalisation. We can all see that there is quite a place and a need for this in banking in this country. When you go to a small town, in respect of which you are debating whether or not it can afford schools, at the same time very often it carries two banks. That, obviously, is a luxury and a legacy from the past and something that calls for rationalisation. The Government promise it here but, like Senator FitzGerald, I cannot see the slightest approach to rationalisation in what is recommended here.

It is specifically stated that this will operate separate from the parent bank and also that staff conditions and other facilities will be improved. In fact, the Minister went so far as to say that promotion prospects would be improved. That is de-rationalisation with a vengeance and undoubtedly is a flat contradiction of the statement quoted so effectively by Senator FitzGerald from the First Programme for Economic Expansion. I cannot see that this is justified today. In the present case, a bold policy of rationalisation should have been undertaken and that policy of rationalisation could have been undertaken by making adequate compensation to the staff, without in any way impairing the urge and the drive to rationalisation. Modern banking requires so many mechanical devices, and so on, that it makes sense that these should be concentrated together in a small town or town units.

Then we come to the question of the price paid per share, and so on. I find myself much more agreeing with Senator E. Ryan on this. After all, the last report from the National Bank, dated 31st December, 1965, shows that the dividend paid last year consisted of an interim dividend of 7½ per cent and a final dividend of 8½ per cent, making a 16 per cent dividend on the 10/- basic share. Surely the market value of such a share—a share bringing in a yield of 16 per cent—would, at most, be 3 times the share value. In other words, these shares should have been around 30/- to 35/-, based on that yield. Yet, they are bought at 56/6d, almost twice that amount. In other words, due to the amalgamation, the shareholders have made a real kill in this, just like the shareholders in any other of those take-over companies are making.

Where is the money coming from?

I shall come to that in a few minutes. The amount is made up of the yield that was being produced which justified 35/- and the reserves that were being accumulated in the banking system which, if broken up, would have produced that. However, I suggest that this idea of breakup and it all belongs to the shareholders is a very antediluvian concept. The shareholders, by and large, when they get a fair dividend of 6 per cent, or so, should consider that most of the undisclosed profit is discharged. The undisclosed profit is every bit as much the property of the staff who have been working on it and the property of the people as a whole. I believe that a good deal of that could have been used.

That applies to all the take-overs but it is illustrated here that a good deal of the mark-up could be used to ensure that the staff did not suffer by the rearrangement that has taken place. I believe they have a moral as well as a just and right claim on the asset that had been created just as well as the shareholders but it raises the whole question that we see every week, day in day out, in those take-over bids. We see the city of Cork taken over right along its main street. It is the same in Dublin. It is all for the same purpose. In other words, you have this break-up. You have shares jumping in value and you have shareholders effectively getting what they could not realise without a breakup. Hence the incentive to shareholders to get out on a merger. Just consider how much the banking system, which is being bought for £16 million, was yielding at that rate. Dividends were paid on £480,000 in the last year. That meant that the effective yield was only 16 per cent on the shares as they stood at that period. Now these have to be replaced. The bank has put in its own money and now £16 million is going in and the bank will expect to have that remunerated at 6 per cent at least which means that the amount that will have to go out under the heading of remuneration for capital will be double what was going out to the shareholders who formerly were running this. Again, therefore, it poses a problem—certainly the ability of the bank to create assets and to add to its assets will be greatly lessened by this amount and certainly its shares cannot be as attractive as they have been in the past.

We cannot take this question of banking and monopolies without noting that the State has given every assistance to the present take-over and contrasting that with the attitude of the State to the Post Office Savings Bank where they are prevented, by legislation, from paying more than 2½ per cent, something that is absolutely unfair to the small investors who constitute the clientele of the Savings Bank. How that can be justified and left to drag on from year to year is something I cannot understand. It has been condemned again and again by very prominent people such as the Most Rev. Dr. Lucey and the Most Rev. Dr. Purdue has recently joined in.

I again appeal to the Minister to consider this and to ensure that the growth in inequity is removed. I would appeal, in closing, that the name of Daniel O'Connell be given some mention in the title of the new bank.

I find it very difficult to understand the logic of the Senators on the other side of the House.

I am sure you do.

Ní nach ionadh.

Senator O'Quigley attacked the Government for allowing foreigners to buy Irish land and in the next breath, for permitting the Irish people to buy a foreign bank. It does not appear to me to make a great deal of sense. He made the extraordinary statement that Messrs Jones, Lang and Wootten, chartered surveyors, knew nothing about the valuation of the Irish assets of this Bank, but the fact is that these people have, as we know, an office in the city and are well-known chartered surveyors.

With no telephone.

They have an address in the city anyway and I should prefer these people valuing the assets of the bank——

Than an Irish firm?

——on behalf of the Irish people involved in the transaction rather than see some firm with a half baked team of Irish economists to value it who would not know what they were doing at all. The whole argument I have been listening to this evening has been a complete contradiction from beginning to end. Surely there should be very few Senators who would not be glad to see this happen. If Daniel O'Connell did found this bank he lost control of it very quickly. He must not have been minding his business very much——

He was looking after the interests of the Irish people.

——when he let it go to English people, and we are now making a genuine effort to get it back under our control. Nobody should object to the proposition to take it over and put it under Irish control when it will mean a considerable asset to this country and earn considerable extra revenue. One most extraordinary statement I heard was made by Senator Quinlan, who objects to Irishmen getting good value. It would be like going to a fair and objecting to a man getting a higher price for his cow than he could get. It did not make any sense at all. There is a practical guarantee that the employees of this bank will be cared for, and I am certain that they will. I believe that this is a step in the right direction in making us masters of our own affairs in the banking world, something that we must support, and something which in the long run will be a bargain and a substantial profit for us, a thing on which we should back the Government without any question at all.

I do not propose to reply to this debate on behalf of the Minister for Finance, who is detained at a Government meeting. The only thing that I can do is to say that he would like to get all Stages of this Bill today. I think that is a reasonable enough request because it is a small simple Bill which does not admit of serious amendment. It has been before the Dáil and it has a certain amount of urgency.

Was it amended in the Dáil?

I could not say that.

I want to put down an amendment to section 6.

The question is: "That the Bill be now read a Second Time."

Would it not be better to adjourn until the Minister can reply? It is very unusual to terminate a debate without any reply. Naturally, we sympathise with the Minister's substitute, who can hardly be expected to reply to the very complicated debate.

I would not attempt to reply. I came in because my business is next on the Order Paper.

Can we go on to the next business at this stage?

If you wish to adjourn and take up the Broadcasting Bill, I have no objection.

Before we proceed, the Chair understands that the Adjournment is requested in order that the Minister may reply——

——and there will be no further discussion on the Minister's reply.

Yes, that is agreed.

The Second Stage is adjourned to meet the convenience of the Minister.

Further consideration of Second Stage adjourned.