Trustee Savings Banks Bill, 1989: Second Stage.

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

This Bill provides for a comprehensive updating of the legislation governing the Trustee Savings Banks. The main governing legislation dates back to the year 1863 and, while there have been a number of amending provisions down through the years, the basic rules have remained largely unchanged. This legislation served its purposes well when the Trustee Savings Banks were simply savings institutions but much of it is now outdated and has no place in today's financial environment. The Trustee Savings Banks are now subject to some archaic regulations which severely restrict their ability to realise their proper potential and to cope as effectively as they should with intense competition.

The Trustee Savings Banks have a long tradition of service to the community in this country. The trustee movement was founded in the early years of the last century to encourage thrift and to provide safe repositories for small savings. From the beginning the emphasis was on tight regulation to protect these savings. The movement gradually developed a banking service which became identified with the smaller depositor, and only in very recent years the smaller borrower, and which had a special local character.

As financial activities became more varied and complex and competition increased, many of the local units did not have the capacity to survive on an independent basis and so the process of amalgamation gathered momentum.

They are now grouped into two banks, the Cork and Limerick Savings Bank and the Trustee Savings Bank Dublin. Between them these two banks have a total of 64 branches throughout the country and both have plans for further extensions of their branch networks. At the end of the last financial year the total of balances due to depositors was in excess of £760 million and the number of employees was 800.

The Trustee Savings Banks are a substantial retail banking operation. Their retail outlets have strong potential for expansion but it is necessary in the first instance to remove existing restrictions on their activities and to allow them to provide a full retail banking service. While they now provide many of the services of a commercial bank including current accounts, loans and foreign exchange, a full service cannot be provided under the existing legislation.

The range of Trustee Savings Banks activities is legally restricted at present to deposit taking, making of secured loans and such activities as, in the opinion of the Minister for Finance, contribute to thrift. They are confined to taking deposits from and making loans to individuals only and not companies and this is a very severe handicap as it excludes them from a large area of the business world. In addition to the restrictions relating to deposits and loans, they cannot invest in new areas of financial activity such as fund management and corporate finance.

The scale of activities is also influenced by the proportion of depositors' funds which the Minister for Finance allows the Trustee Savings Banks to retain. Under present arrangements it is required that after allowing for working balances some 80 per cent of depositors' funds must be lodged with the Exchequer and the Trustee Savings Banks are paid a margin over the cost to them of these funds to meet their overheads. The balance of 20 per cent is available for lending to individuals. At the end of the last financial year the total amount on deposit with the Exchequer was in excess of £600 million.

The main purpose of this Bill is to facilitate the Trustee Savings Banks in providing a competitive banking service in equal competition with other banking institutions. We all accept the principle of the level playing field between the different financial institutions and this Bill is a step in this direction. While they are not big in banking terms, the Trustee Savings Banks have developed a wide retail network over the years and they have a record of reliability and good service which should enable them to grow significantly once they are given the freedom to do so. This Bill will allow for an extension of their activities and will allow them to respond more flexibly to the requirements of the market.

The proportion of total funds invested with the Exchequer will be reduced gradually as they extend their business in new directions. The provision in this Bill transferring the supervision of the Trustee Savings Banks from the Department of Finance to the Central Bank, the appropriate supervisory authority for a banking operation, will facilitate those changes.

The new directions for the Trustee Savings Banks envisaged in this Bill reflect changes taking place in relation to the savings banks in other European countries. The savings banks have a great tradition and a great reputation in Europe of service to local communities. There is a general realisation, however, of the need for some fundamental changes and, in particular, there is great emphasis on amalgamation and on change to company status.

The amalgamation process in the savings bank sector has been most strongly in evidence in France and Denmark. The Savings banks in France now have a completely new structure and during 1985 and 1986 their number dropped by 70 to 395 institutions as a result of mergers. Savings banks are up-to-date with regard to the level of new technology they are utilising in their day-to-day banking and have, in fact, pioneered innovative areas such as card technology and data banks. German savings banks have been particularly active in the technical field with increased computerisation and automation to increase co-operation throughout the savings bank organisation.

Another direction in which European savings banks are heading is towards changing their system of organisation to that of company status. Denmark has legislation underway which would allow individual savings banks to become joint stock companies. In the Netherlands two of the large savings banks are about to set up a limited holding company, thus enabling them to raise funds on the capital market directly. In Britain the Trustee Savings Banks Act, 1985 enacted the framework for restructuring the Trustee Savings Banks and transferring them into private ownership.

Before I turn to the individual sections of the Bill, there is one issue in particular which I would like to clarify and this is the question of ownership. The Trustee Savings Banks have been established and run under trusteeships and, because of the voluntary role of the trustees and the community service aspect of the banks' activities, ownership has never been an issue. The broad assumption has been that they are voluntary bodies providing a community service. The question of ownership must be considered, however, if the Trustee Savings Banks are to provide a much wider banking service and if there is a likelihood that they may be reconstituted as companies. The legal advice to me is that the Oireachtas has the power to dispose of the assets of the Trustee Savings Banks or to alter their status as it sees fit. This power is, of course, subject to the condition that the rights of depositors are fully protected in relation to their deposits and interest thereon under any amending legislation, in accordance with accepted practice.

I will not go through the sections of the Bill item by item as much of it is self-explanatory and is broadly consolidating and updating the existing legislation. I propose, therefore, to focus on the more significant items which will affect the status of the Trustee Savings Banks.

Part I of the Bill, which brings us up to section 8, deals with standard procedures including the laying of regulations before the Oireachtas.

I would like to make special mention of sections 5 and 6 at this stage. Section 5 allows for regulations to remove difficulties in the implementation of the provisions of this Bill when it is enacted.

This power to make regulations which could modify the terms of the legislation was criticised in the Dáil on the grounds that it assigns to the Minister an authority which properly belongs to the Oireachtas. First of all, let me make it quite clear that there is nothing novel in this approach. There are several precedents, the most recent being the building societies legislation and the sole purpose is to facilitate unforeseen adjustments of a technical nature without the need for further legislation. Any regulations that might be introduced under the terms of this section could only be of a minor nature and would be introduced simply to facilitate the implementation of this legislation.

The existing Trustee Savings Bank legislation is complex and is in many respects seriously outdated in today's environment and the present Bill is the first major reform of that legislation in this State. There is, therefore, a strong possibility of unforeseen technical difficulties arising in giving effect to the terms of the present Bill and this provision is to enable the Minister to deal with them. This power can effectively be exercised only within the context and intentions of the present Bill. There is no question of the possibility of the thrust of the legislation, or of any of its provisions, being undermined by the use of this section. Despite the apparent breadth of its drafting, my advice is that it can only be exercised in a very limited way. I would draw your attention to the time limit of three years on this section, and to the fact that, as provided in section 4 of this Bill, any regulation made under this section would be placed before both Houses of the Oireachtas who would have the power to annual the regulation within 21 days if they so wished.

Section 6 empowers the Minister to modify provisions of this Bill by regulation to take account of relevant changes in company, banking and building society legislation. This provision is necessary because many of the provisions contained in the Bill have originated in company, banking or building society legislation and Trustee Savings Bank legislation will almost inevitably require amendment should any further changes be made in these areas. Instead of having to return to the House to amend the present legislation, this provision allows the Minister to make such amendments by regulation. This in no way undermines the authority of the Oireachtas as it will only apply to legislation which has already been adopted by both Houses. It will not involve making any new legislation. These regulations will also be subject to section 4 where they will be placed before both Houses of the Oireachtas which have the power to annul any regulation within 21 days after it has been placed before them. There is a similar provision in the current building societies legislation as many of its provisions have drawn on company and banking legislation.

Part II deals with the establishment and licensing of Trustee Savings Banks. While the establishment of new Trustee Savings Banks is highly unlikely in view of recent trends in the financial sector, we cannot rule out this possibility in the longer term.

The requirements for establishment are specified in section 9. The fundamental condition here is the supervisory role of the trustees. This section also removes the outdated restrictions on the activities of the Trustee Savings Banks. In effect, they will now be empowered to carry on, in addition to their existing activities, any other financial service which the Central Bank considers prudent. This should open the way for them to provide a truly modern banking service and encourage them to exploit other market opportunities. The safeguard here for the Trustee Savings Banks, and the banking and financial sector generally, is the requirement for Central Bank approval. Provision is also made in the section to enable the Trustee Savings Banks to carry on business outside the State. In modern banking, with the increasing emphasis on freedom of capital movements and globalisation of services, it makes no sense to prohibit an institution from doing business outside the State and the provision in this legislation will ensure that this does not arise.

Another key change is contained in section 10. Up to now the Trustee Savings Banks have been supervised by the Department of Finance. This is unsatisfactory because the Department are not the best equipped agency for this purpose; the appropriate supervisory authority for all banking operations is the Central Bank and the Trustee Savings Banks should be no exceptions. Accordingly, the supervisory function is now being transferred to the bank. This will be a much more satisfactory situation where a range of financial institutions, including banks and building societies, will come under the one supervisory authority. It will facilitate a consistent approach to supervision and is vital at a time when competition in this sector is increasing.

Part III of the Bill deals with the trustees themselves. The most significant point here is in sections 17 and 18 which both limit the numbers of trustees and impose an age limit. A maximum of ten trustees and an age limit of 70 years are proposed. Because of amalgamations over the years there has been a tendency to add to the numbers of trustees to the point where numbers were excessive and a maximum of ten is considered reasonable. I would like to avail of this opportunity to acknowledge the contribution made by trustees over so many years in promoting the Trustee Savings Banks as a community service.

Part IV of the Bill deals with supervision. Most of the sections in this part are based on the Central Bank Acts of 1971 and 1989. Perhaps the most significant provision under this heading is the power of the Central Bank to intervenue and protect the depositors where it has reason to conclude that a Trustee Savings Bank will not fulfil its obligations.

Part V of the Bill deals with the management and administration of the Trustee Savings Banks and draws heavily on the current building societies and Central Bank Acts. It provides for the keeping of proper accounts and for the development of superannuation schemes subject to the approval of the Central Bank.

Part VI of the Bill is concerned with the amalgamation of the Trustee Savings Banks and the procedures to be followed. In earlier years the local Trustee Savings Banks were generally independent units but mergers became inevitable as greater efficiency of operation and greater economies of scale were required. The new provisions relax the existing requirements for amalgamation. Previously amalgamation took place by special resolution passed by three-fourths of the trustees which is too high a proportion. This is now being changed to three-fifths.

There are no proposals at this time to amalgamate the Cork and Limerick Savings Bank and the Trustee Savings Bank, Dublin. While they share some facilities and maintain close contacts, they are entirely separate and independent organisations. The pressures for amalgamation into one unit may well increase as competition intensifies and there are some obvious advantages in a pooling of resources. The two banks have discussed previously the potential for amalgamation and I would expect that they will look at this again in the light of their position following the enactment of this legislation. Amalgamation will require the prior approval of the Minister for Finance and the Central Bank. I would certainly not stand in the way of amalgamation if both banks were satisfied that this was in their best interests.

The most significant feature of part VII of the Bill is section 57 which provides for the reorganisation of the Trustee Savings Banks into companies. There are no plans at present for any such reorganisation and the intention is to continue with the trusteeship arrangement. As the Trustee Savings Banks extend their activities, however, it may be necessary to introduce a company structure to allow them greater flexibility in trading and in raising capital and to open the way for more direct links with other financial organisations. However, in an increasingly competitive environment, we must recognise the possibility that the Trustee Savings Banks may find it necessary to become associated with larger financial groupings and some level of joint venture or even close relationship may be desirable in due course. In this kind of situation it would in all probability be necessary in the first instance to change the trustee status.

Section 57 empowers the Minister for Finance to do this by ministerial order. There was some criticism of this procedure when the Bill was being debated in Dáil Éireann, on the argument that it was conferring undue authority on the Minister. The reality is quite different; this order will have to be approved by the Oireachtas before it can take effect. In the event, therefore, of proposals for a fundamental change in the structure of the Trustee Savings Banks at a future date, the Oireachtas will have the opportunity in advance to debate this change and the reasons for it.

Let me emphasise that in providing for company status two distinct options are provided for. Conversion can be to a company controlled by the Minister or, where this is not the case, there are adequate provisions for the financial interest of the State to be safeguarded. The decision as to whether the Minister for Finance should retain this control would be taken at a later date and would be subject to prior Oireachtas approval. Contrary to the impression given by some people who spoke on this Bill in Dáil Éireann, the Bill does not determine that the Trustee Savings Banks shall be in private ownership. It provides that for now they will continue as trusteeships and they may convert to company status at a later date under either of the options provided for and only with the prior approval of the Oireachtas.

The present legislation served its purposes well as long as the Trustee Savings Banks simply fulfilled the role of local savings institutions. In order to survive and prosper in the modern environment, they must have a much wider brief. By comparison with the major banking institutions operating in this country the Trustee Savings Banks are small. As the internal market of the European Community evolves and free movement of capital becomes the norm, there will be increasing competition for market share and the Trustee Savings Banks must have the necessary freedom and flexibility to compete effectively.

The Trustee Savings Banks have a great tradition. Even with the limiting conditions imposed on them, they have made great progress in modernising their activities and extending their range of services to the community. The present legislation opens up new possibilities for them. They will now extend their range of services and become banking institutions in the full sense of the term while maintaining their distinctive characteristic of special service for the smaller depositor. They will now be in a position to provide a wide range of services and to expand their facilities in the confidence that they can be fully competitive.

I commend the Bill to the House.

The Bill before us purports to update the legislation governing the operation of the Trustee Savings Banks. On face value, there are very few in this House who could really argue against that. However, under closer examination there are certain aspects of the Bill and certain authority vested in the Minister that bear very close scrutiny and very strict examination by the House.

As has been said, the Trustee Savings Banks are voluntary bodies providing a community service. At present their activities are confined to anything the Minister for Finance might consider contributes to thrift. I borrow that expression from his Dáil contribution, if I am correct. Anything that contributes to thrift is within the ambit of the Trustee Savings Banks at the moment.

We have had the figures given to us again today by the Minister and, indeed, we have heard them in the Dáil as well: £760 million depositors' money on deposit, 800 employees. We need only look to the basic legislation of 1863 to realise, notwithstanding a few amendments and a few additions along the way to that basic legislation, how outdated the situation is for Trustee Savings Banks.

As saving institutions they were developed as safe havens for the small savers. They have continued the development over the years into a banking service, perhaps for the smaller saver as well. This has been welcomed all around. We have seen the amalgamation over the years, from the many and multifarious small units into the larger units, and now we are faced with two savings banks, the Cork and Limerick Savings Bank and the Trustee Savings Bank in Dublin. They have, as the Minister pointed out, a large branch network, a large retail network. However, they have been confined to taking deposits from and making loans to individuals, not to companies. Nor can they get involved at the moment in any new areas such as fund management and new financial activities of different kinds.

Under this Bill, the Trustee Savings Banks face comprehensive revision of their activities. The Trustee Savings Banks activities referred to in this Bill also relate to the proportion of the depositors' funds they are allowed to retain by the Minister for Finance. At present it is 80 per cent which must be lodged with the Exchequer. This amounts to over £600 million in the year. This Bill will allow Trustee Savings Banks to compete on equal terms with other financial institutions, particularly competing abroad, which would appear to be the flavour of the month when anybody is discussing financial institutions. Quite seriously, it appears to be a great way forward for all the financial institutions in this country in terms of the Europe of post-1992. It will be necessary to have a gradual and phased reduction of the funds the Trustee Savings Banks have invested with the Exchequer as well as transferring them to the Central Bank from the Minister for Finance's supervision.

I would like further details from the Minister as to how this operation will be carried out. When you consider 80 per cent of the funds in the last financial year, over £600 million, were invested with the Exchequer put against EBR if I read the situation correctly, over what length of time will this be phased from the 80 per cent that is now with the Exchequer to what we are now proposing? I can see quite difficult hiccups if the matter is not phased smoothly. I have not read anywhere in either the Official Report or in the Minister's two speeches both here today and in the Dáil how he intends this to be carried out.

There have been many comparisons made in relation to the operation of savings banks in other European countries. The Minister dwelt on different countries here today. Similar legislation passed through the French and the Danish parliaments. The Minister referred to Germany and, indeed, in 1986 there was this type of legislation in the UK parliament. All of the changes generally relate to structural and operational changes in savings banks. Particularly they concern themselves with amalgamation, technical innovation and the possibility and reality of changing to company status.

The Minister referred to the ownership of the Trustee Savings Banks here and, in the Dáil. This caused quite a lot of vexation among many of the contributors in the Dáil. It is not an area that I personally get over-excited about, nor do I feel threatened necessarily by privatisation, even though I accept what the Minister said today, that really we are not considering privatisation at this point. That may be further down the road but it is not what is before us in the Bill today. However, when the matter arose in the UK parliament I understand they took advice there as to who actually owned the Trustee Savings Banks and on the savings banks situation in the United Kingdom and that they were satisfied in the end that their Government had the right to proceed as they did. We apparently have taken the same advice, or are using perhaps a precedent for very similar legislation. Perhaps the Minister could develop for this House the source of his advice in relation to the whole ownership issue of the Trustee Savings Banks and how he is so confident — and I hope he is right in his confidence — that we are entitled to do what we are doing here today.

I would like to place on record my thanks to the trustees and to the Trustee Savings Banks generally for the role they have played over the past century or so for the small depositor in our country. They have, perhaps, been underrated. Perhaps, because of the restrictions placed on them they have not been as obvious in the commercial market, nor has their PR been as vigorous or as aggressive as other financial institutions. We should expect changes in this area in the future if and when this legislation is passed.

A point that may be missed, and I hope will not be changed with the changing complexion of the Trustee Savings Banks, is that their opening hours are far more sociable than the present hours of the banks. They open through lunch hour and later every evening. I realise there are delicate negotiations going on in this area and I hope it will be only a matter of time before all banking institutions will provide what I would like to call sociable hours for their clients, for their depositors, for their customers, whatever title you would like to put on them.

There is one very worrying aspect about this legislation. That would appear to be the fact that the Bill has been advanced before all the details in relation to it have been worked out between the Central Bank and the Department of Finance. I have been advised by, and have spoken to parliamentary colleagues each of whom has been Minister for Finance in recent years Deputy Noonan and Deputy Dukes. As late as February 1987 when the legislation had been held up for quite some time there were four very important outstanding issues. Only one of those four issues — and I will detail them in a minute — appears to be addressed by this Bill. So, I can assume — and perhaps the Minister could confirm whether I am right in this assumption — that only one of the four problems has been resolved and the rest have been left in another arena slightly removed from the Houses of the Oireachtas, to be dealt with either by order or by ministerial regulation, or by some area other than by directly bringing the details before this House. The details were not presented to the Dáil, so I hardly expect we will have the benefit of the details we will need.

The four areas that have been causing problems are as follows: (1) the accountability of the trustees of the Trustee Savings Banks to the Central Bank and to the Minister for Finance generally; (2) the determination of interest rates paid and charged by the Trustee Savings Banks to their customers; (3) interest rates and management expenses on funds placed by them with the Minister, and (4) the related question of investment of the Trustee Savings Banks' funds.

After a lot of deliberation and months and months of discussion, negotiation and advice, these matters were outstanding as of February 1987. I know time has moved on since then; we have had two Governments since that time, but only one — the first of these issues, namely, the accountability of the trustees of the Trustee Savings Banks to the Central Bank and the Minister for Finance — has been resolved. I would appreciate if the Minister could dwell in some detail in relation to the four points which held up this type of legislation for some years when perhaps we could have been debating it before now. When only one of the four issues has been resolved that previous Ministers felt prevented the legislation from being presented to both Houses, how does the Minister think we are in a position to debate thoroughly and with a full understanding what is before us here today? I am afraid the groundwork was not completed. Only one of the four issues has been dealt with. I await with interest the Minister's response to that point because it underlines perhaps my main problem with Second Stage.

As I say, I support the overall intention of the Bill but I have enormous difficulties with aspects that relate to the fact that three of the four difficulties that presented themselves over the years still remain outstanding. We do not know, for example, what the conditions of the licences will be, the true extent of the scope of this Bill, or how the interest rates will be determined. I would have thought those three issues were fairly basic to what we are discussing here today.

There is another point to which I would like the Minister to respond; again, it may be a matter of some misunderstanding, but certainly views differ as to the present situation. At present I understood that the Trustee Savings Bank deposits were underwritten by the Government. This goes back to a few years ago when Deputy Alan Dukes was Minister for Finance and there was a scare abroad in relation to a certain savings bank and depositors panicked. There was the whole scenario of a possible snowball effect, of deposits being withdrawn and the undermining of the bank. Deputy Dukes, as Minister, went on radio at the time guaranteeing that the Government would underwrite all the deposits of the small depositors with the savings bank and that there was no need to fear. I would like the Minister to respond to what the position is in relation to that whole issue at present and what the position will be if and when this legislation is enacted. I will be tabling a series of amendments for Committee Stage and will go into the points in more detail at that time.

The first section that causes me difficulty — I am sure it may cause some other Members of this House difficulty and I feel the Minister tried to pre-empt much debate in this area — is section 5. The Minister referred to it specifically today. Notwithstanding the assurances the Minister tried to give us, I am afraid the interpretation would appear to be that the Minister is effectively wanting carte blanche in relation to what may or may not happen over the next three years if difficulties, should arise of any technical nature in implementing different sections of this Bill.

I would have thought, given the amount of debate and discussion between the Central Bank and the Department of Finance, the number of years it has taken to bring this Bill before the House, that any difficulties could be pre-empted and that they could be nailed down in detail in the different sections of this Bill. Perhaps the Minister might, by example, indicate to this House where he thinks such problems may arise. He cannot, of course, give us specific examples of technical difficulties because if he could he would have put the resolution to the problem in the Bill rather than request carte blanche to resolve the problems himself. “Unforeseen technical difficulties” are the Minister's own words. I find that scope far too wide for any Minister to come before this House and request. I know there was great unease in the Dáil in relation to this matter as well. Because of the Minister's request in this area, notwithstanding precedent which he pointed to today, he could perhaps detail for us to a far greater extent why he feels it is necessary for him to take this power to himself.

Section 6 will allow the application by regulation of relevant changes in company and banking and building society law to the Trustee Savings Banks as many of the provisions of this Bill will have been drawn on existing and proposed legislation in these areas. Again, we are talking about laying regulations before the Houses of the Oireachtas. This is a vital area and difficult as it is to cede to the Minister his request in relation to allowing him the powers to decide this, that and the other, the Minister, at least should consider an affirmative order in relation to this section rather than just a regulation laid before the Houses. I know we can annul the regulations within 21 days, if we ever get around to doing it and if Standing Orders allow us to do so but, quite frankly, it should be put in a positive way. Will the Minister please consider an affirmative order rather than just regulation? At least that will guarantee debate and it certainly would put to rest many of the queries that are in my mind at the moment in relation to the carte blanche the Minister is requesting. I hope he will be able to concede to this House what I feel is a very reasonable request.

Would the Minister consider affirmative orders both on section 5 and section 6? He allows that procedure later in the Bill and I am requesting that he extends that to ensure there is a full democratic debate on matters he feels might be essential. We would probably agree with the Minister but we would like to be able to contribute and to listen to his views as they arise and, hopefully, support what he intends doing as the different issues arise.

Section 9 removes the limits on the present activities of the Trustee Savings Banks and puts them on a more commercial footing, which is essentially what this Bill is about. We can have no argument with the principle of that.

Section 10 deals with the procedures for the granting of licences by the Central Bank to the Trustee Savings Banks. Again, we have no details as to what the conditions in relation to these licences may be.

They are all different.

Perhaps the Minister could expand again because we do need a detailed discussion here. Perhaps some of the conditions attached to the licences would be totally unacceptable to the Houses of the Oireachtas, bearing in mind the very special nature of the Trustee Savings Banks and the very special job they have had to do over the years and, we hope, will be able to continue to do as well as expand. Could we have some indication as to what range of conditions may or may not be attached to these licences, what they will even concern themselves with, how restricting or limiting these licneces may be or if they are restricting or limiting in any way?

The Central Bank——

We are ceding to the Central Bank——

We have done it already.

——authority in these areas for some time. I know that finally the details in any individual licence will be the responsibility of the Central Bank. Because the Minister is asking us to support him in transferring a function from him to the Central Bank, a function which has been a matter for a Minister in these Houses, I certainly would be concerned that I would know little more about what we would be giving up and what we would be ceding to the Central Bank. The whole principle of introducing licences for the first time to the Trustee Savings Banks needs to be developed more. We need to be told what exactly will be considered in relation to conditions on these licences and how restricting, if at all, these licences may be.

Once I know exactly what the conditions will be and the terms under which the Central Bank will be taking over the regulatory role of the Trustee Savings Banks, I have no difficulty with the concept that all banks, all financial institutions, are under the same supervisory authority. But before we relinquish our present position, which is vested in the Minister at the moment in relation to Trustee Savings Banks, I would ask him to be more forthcoming with us. I would ask the Minister to indicate to us exactly what the position will be in relation to these licences and the range of conditions that may or may not be considered.

Section 12 allows the Central Bank to attach to the issue of licences "such conditions"— this is the point I am making; this is the sort of vague reference in the Bill to what we are ceding now to the Central Bank. As this is central to the future operations and the future success of the Trustee Savings Banks competing freely with other financial institutions, we should have some indication as to what these conditions may or may not be. We should be entitled to examine those conditions and then, hopefully, satisfied by what the Minister will tell us, support him in relation to what he is proposing to do in this section.

Just to mention in passing, as the Minister did, sections 17 and 18, the reduction in the numbers for some in relation to the number of trustees — not fewer than five, no more than ten — and there is a 70 year age limit. Will there be provision for that being extended under any circumstances? Perhaps the Minister could indicate that to us. Indeed, at present in the Garda Síochána legislation and various other pieces of legislation we have age limits and retirement ages included, but there are ways and means by which these can under certain circumstances be extended. The Minister might indicate that to us. Does it mean that all those trustees at the moment who are over 70 years of age are de facto gone once this Bill passes through — and I presume at this stage we are assuming it passes through, given the numbers game in this House? Are we to assume that all those over 70 years of age are, as a result of this Bill, deemed ineligible to continue holding office? Is there any phasing-in of this requirement for the older members, who have given years and years of voluntary community service as trustees in their local savings banks? I would ask the Minister to dwell on that for a moment. Perhaps the Minister could give us some figures as to how many will be affected? Apart from the age clause that will affect some, there is the whole position as to the existing numbers in the two main Trustee Savings Banks here.

Section 32 provides that trustees shall pay into a special account, in the name of the Minister for Finance, or invest in the purchase of Government securities such proportion of the deposits as may be determined by the Central Bank after consulting with the Minister. This comes back to the general point I made earlier, that I would ask the Minister to develop in more detail how the transition from the 80 per cent investment in the Exchequer now to what down the road, I assume, will be more autonomy for the Trustee Savings Banks to do as they will with their own deposits, how that transition will come about? Is it section 32 I should be looking for? Perhaps the Minister would develop that in relation to the points I made.

In relation to the amalgamation of the Trustee Savings Banks, which is a realistic possibility — I am not sure that that view is widely held at the moment — when one looks at the financial institutions and the whole stage post-1992 and the increased competitiveness, the need for economies of scale and the pooling of resources, it is more than likely that the two savings banks in this country will have to consider that as a realistic option. As the Minister pointed out, they have had discussions in the past which did not come to fruition, but perhaps this legislation will act as a catalyst and allow them to consider pooling their resources. Neither are particularly large in the overall scale of financial institutions at the moment, but I think my information is correct in saying that, if the resources were pooled and the capital available to them was pooled, they would be a considerable force, certainly on the Irish stage and hopefully they could develop to become an equally important force on the European stage. Of course, we are not just talking about amalgamation within the country; there can be amalgamation between savings banks across European borders, which is an interesting scenario in this area. Again, this will have to be looked at in great detail. I agree with the relaxation of the requirements in this area from three-quarters to three-fifths of trustees by special resolution. Three-quarters would be considered too restrictive overall in the democratic procedures today.

Section 58 gives authority to the Minister for Finance to reorganise the Trustee Savings Banks into companies and to arrange for the transfer of all assets and liabilities to the new companies. The Minister may make a draft order, etc., and it shall not have effect until a resolution approving the draft has been passed by the Houses of the Oireachtas. To me that is an affirmative order, if I interpret the parliamentary draftsman's language correctly. I approve of that method as a procedure. I am asking the Minister to apply the procedure of affirmative order to the two previous sections, sections 5 and 6, where you are talking about regulations and laying orders before the Houses of the Oireachtas. In view of the importance of what we are doing today, would the Minister consider approving an affirmative order for sections 5 and 6 as well as section 58, which I think is very well placed?

In conclusion, I support the basic concept of what the Bill is intended to establish. I have serious misgivings about giving the Minister, or any Minister, the scope to make decisions on areas and issues that should be detailed and covered in this Bill. This should be the case if the proper groundwork had been done, if all outstanding matters in terms of differences of opinion between the Central Bank and the Department of Finance had been resolved, rather than just one of the four matters I have previously detailed. For the Minister to demand the scope that he has today, and as he did previously in the Dáil, might be acceptable in a dictatorship but, quite frankly, in a democracy, without giving us the necessary details and the full explanations as to why the groundwork has not been done, I do not believe that what the Minister is demanding of us is acceptable.

At the outset I would like to welcome the Minister, Deputy Reynolds, to the House. When he was Minister for Industry and Commerce a noticeable feature of his work was that he was forever bringing forward Bills which had been left behind by other Ministers and by other Governments. In particular, the Insurance Bill and the Companies Bill were brought forward by him when he was Minister for Industry and Commerce — both Bills had been talked about for many years but were finally brought forward by him. Similarly, as Minister for Finance he brought forward the Central Bank Bill early in the year and indeed there were other pieces of legislation also. He is renowned for introducing legislation; he is a man for action. Despite what Senator Doyle said, this is a Bill that has been around for ten years. Yet, it is this Minister, Deputy Reynolds, who has come forward with it.

As we all know, this is an important Bill. It provides for a very comprehensive revision of the legislation governing the status and the operations of the Trustee Savings Banks. As previous speakers mentioned, this legislation goes back to 1863 and there have been some amending provisions during the years. The essential requirements of that Bill have largely remained unchanged. As other Senators and the Minister have indicated, this legislation served its purposes well when the Trustee Savings Banks were simply saving institutions. However, in modern conditions, and particularly with the advances in banking in more recent times, the legislation is no longer adequate and certainly in my opinion it very seriously restricts the ability of the Trustee Savings Banks to realise their proper potential and to compete as effectively as they should.

The Trustee Savings Banks have provided a most useful service for the community. The movement, which was founded in the early years of the last century, was established to provide a safe depository for the small saver and for small savings. It developed a banking service which has become identified with the smaller depositor and the smaller borrower and which has in many cases almost a parochial or certainly a very local character. The fact that they dealt with the very personal sector of banking was in itself a restriction.

The other restriction, of course, is the fact that 80 per cent of all moneys they hold on deposit could not be recycled or reloaned for the normal activities of the bank — things like mortgage finance, bridging finance, personal loans. Only 20 per cent of deposits they took in could be used for that purpose. If you compare that with the other commercial banks, they can use, as I understand it, 65 per cent of all their deposits for this purpose. Clearly, that is unfair in so far as the Trustee Savings Banks are concerned.

What the Trustee Savings Banks have been looking for for years, what they want and what they are now getting, is the same pitch with the same rules to allow them to develop in the future. The Minister has referred to future developments and to a further branch network. I know there is a site earmarked for the Minister's home town, Longford, and I welcome them there. I would suggest that when this legislation is through they might consider a branch in Boston, where I think they would do well from the Irish emigrants. It could be very profitable and successful.

Despite what has been said by the previous speaker about restrictions, they have been doing extremely well. The total of balances due to depositors at the end of last year was in excess of £760 million and they have in the region of 800 employees. They are a substantial retail banking operation. There is room for a great deal of expansion, but it is necessary in the first instance to remove the existing restrictions on their activities and to give them scope to provide a full retail banking service. Many of the services they provide include current accounts, foreign exchange, but a full service cannot be provided under the existing legislation. The range of their activities is legally confined at present to deposit taking, making of secured loans and such activities as, in the opinion of the Minister for Finance, contribute to thrift. As things now stand, they are confined to taking deposits from and making loans to individuals only, not to companies. In the modern world of finance this has to be seen as a very severe handicap; it does not allow them to respond at all adequately to the business opportunities that are there for the taking.

In addition to the restrictions relating to deposits and loans, they cannot invest in new areas, such as other financial activities, fund management, corporate finance and so on. They are dealing effectively and well with the smaller things like current accounts, deposit accounts, bridging finance — very basic banking activities. I understand that in the area of ATMs they slot into third place overall after the Bank of Ireland and Allied Irish Banks in terms of volume and, therefore, they are ahead of the Ulster Bank and the National Irish Bank. That in itself is an excellent achievement, but they cannot invest in the new areas where they might like to for the future, new areas perhaps of leasing, stockbroking, insurance, perhaps a smaller or a newer lifetime, or would it be a trustee-time? If they do, I hope they will consider agencies to the insurance brokers. I think that would be very welcome.

I have a great deal of admiration for the Trustee Savings Banks. I see them operating in my own town of Athlone and they certainly work very well. Over the years they have recognised and accepted the real needs of their customers by staying open at lunch time and that service is invaluable to workers. They have also provided late-night openings where you have supermarkets. I understand that is not done on a national scale but it is done in areas where it is appropriate and that, too, is welcome. Generally it can be said that they have been the innovators of the lunch-time and the late opening principle, which I have no doubt will be the practice of all banks and all financial institutions long before 1992 and after.

Banking is different today. It is no longer a luxury, it is now regarded as a very essential service. It has to be used by people in many cases on a day-to-day basis and in some cases on an hour-to-hour basis. Most workers have their salaries paid by way of bank transfers. This is certainly something that is very welcome, even if it is for security reasons alone. That, too, puts greater demands on banks to meet the needs of those who go to work each day, and the banks are responding to that demand. Generally the whole innovative movement by the Trustee Savings Banks in the area of late openings is something that will be developed and worked on in the future by all of the banks.

The question of privatisation has been raised. Obviously, none of us has a crystal ball: we cannot see into the future. We cannot ignore the fact that we are in a fast-changing world so far as financial services are concerned and in the case of the Trustee Savings Banks it seems to me that the first movement would be a merger or some arrangement in this direction of the Cork and Limerick Savings Banks and the Trustee Savings Bank, Dublin. The Minister referred to that in his speech. He made the point that there are no proposals at this time to amalgamate the Cork and Limerick Savings Banks and the Trustee Savings Bank, Dublin. He went on to say that the pressure for amalgamation into one unit may well increase as competition intensifies and there are some obvious advantages in pooling of resources. He further stated that, if amalgamation does come about, it will require the prior approval of the Minister for Finance and the Central Bank and that he would not stand in the way of amalgamation if both banks were satisfied that this was in their best interest. This is the proper approach. If it happens, it will be nothing new. Mergers, take-overs, amalgamations are a regular feature and have been of business life in this country and, in particular, of the financial services industry.

In recent times we have seen many takeovers or amalgamations, mergers, call them what you like. Some years ago the one I had a particular interest in was the Irish Civil Service Building Society, as it was then known, which was taken over by the Bank of Ireland. Some people knew that, before the Bank of Ireland made their offer of £25 a share, there were two other groupings interested in taking over the Irish Civil Service Building Society; and they were then, as we all know, the only building society publicly quoted on the Irish Stock Exchange.

The ICS, as they are now known as, are trading away under the wing of the Bank of Ireland and benefiting from the legislation that we had earlier in the year, the Building Societies Bill, which was passed by both Houses of the Oireachtas. Recently, we have had the takeover, again in the building society area, of the Irish Mutual Building Society by the Irish Nationwide Building Society. In the insurance world we had the Guardian Royal Exchange taking over New PMPA earlier in the year. The list is pretty endless. Only in the last week AIB announced that they are to acquire a stake of 80 per cent in the stockbrokers, Goodbody James Capel, with the option to take full control at a later date.

In the business world we had the famous battle in Westmeath for the take-over of the Westmeath Co-op by the Goodman Group. We had the Premier Tír Laighean take-over by Waterford Express Dairies. So, it is an ongoing, changing world.

There has been much debate on the question of ownership. Again, not having a crystal ball, nor the Minister having a crystal ball, it is not possible to say what will happen. The preference seems to be that the Trustee Savings Banks will be taken into public ownership. The first priority for all of us here is to ensure the survival of the Trustee Savings Banks in today's highly competitive market place. The question of ownership arises only when there is a proposal to change the trustee status and there is no such proposal at this point.

The immediate priority is to encourage and enable the Trustee Savings Banks to provide a wider range of services to a wider public. None of us can say what directions the Trustee Savings Banks may take in the longer term, but the concern of all of us should be that they should grow and prosper. This Bill is facilitating that. It is to be noted that, whatever direction may be taken by the Trustee Savings Banks in the future, the Minister for Finance of the day will have the power and the responsibility to protect the public interest. That is very important.

What the Trustee Savings Banks want is a level playing field. We are endeavouring in this Bill to facilitate them in providing a competitive banking service in equal competition with other banking institutions. Over the years they have developed a track record of reliability and good service, which I believe will allow them to grow significantly once they are given the freedom to do so. This Bill will allow for an extension of their activities and will allow them to respond more flexibly to the requirements of a market. The transfer of the supervision of the Trustee Savings Banks from the Department of Finance to the Central Bank will also be important. The Central Bank are the appropriate proper supervisory authority for a banking operation and this will further facilitate the changes referred to in the Bill.

It is a fact that the whole financial sector has been going through a period of dramatic change for many years. New and improved technology, the implementation of EC directives, are having a big impact on how we must conduct our business now and in the future. I referred earlier to the Building Societies Bill and to the Central Bank Bill. We cannot forget the ACC (Amendment) Bill, which gave the ACC extra flexibility, extra status and, indeed, gave additional powers to the ACC. This Bill is doing something similar for the Trustee Savings Banks. In a changing and challenging world of finance, I feel that the Trustee Savings Banks will prosper as a result of this Bill and I wish them every success in the future.

I must say at the outset that I certainly welcome the general thrust of this legislation as being fairly positive and, indeed, quite acceptable from the point of view of status. The thrust of the Bill is to allow the Trustee Savings Banks to compete in the market place. One of the issues about State and semi-State involvement in companies which has bothered me more than anything else since coming into public life has been the constant haranguing and criticism of semi-State industry at times when they just were not in a position to compete because of the minutiae of legislation. Fot that reason I am particularly happy that this legislation will improve the condition of the semi-State sector and allow it to compete in the market place with other similar industry.

It raises issues for me, however, that I would like to have clarified. The central confusion I find in the Bill is the particular relationship that this legislation will have with the proposed Companies Bill. There are aspects of those two pieces of legislation which, if not in conflict, are so closely interwoven as to invite some explanation from the Minister.

I would also like to raise some fairly general points about the Trustee Savings Bank. It is, of course, part of Irish life. It is the High Street bank of the people. It must be allowed compete; it must be given its head. The accounts of the Trustee Savings Banks are normally published in the last week in November and there is always a little bit of a schemozzle if they are a bit late being published or a bit late arriving. I recall, one famous November some years ago, meeting the manager of a building society which is on the corner of the street which also has the head office of the Trustee Savings Bank in Dublin area. I know him quite well.

He told me they never had such a day. He said they were coming with wheelbarrows up Abbey Street from the Trustee Savings Bank, withdrawing from the one bank and lodging with him. He said it was a record day for his building society, that they never had seen the like of it before, that they never know that level of money existed in such liquid proportions. It was all because of a lack of trust in the bank because of some foul rumour that circulated and which had no basis in fact. It brings home to us and is a very clear indication of the way people worry about their money and the way people need to have trust and confidence in the institution.

What I like about this legislation as a generality is that it brings the legislation which governs the workings of the Trustee Savings Banks more into line with the operation of normal commercial banks and for that reason it will occasion fewer questions about the type of bank that is the Trustee Savings Banks. Indeed it will allow them to merge more into the general banking and financial scheme. That is important if it is to be a success.

I would also like to ask the Minister what have the Trustee Savings Banks been worth to the State. What do we get out of them on an annual basis? I have a very fundamental reason for asking that question. Reference has been by earlier speakers to the question of nationalisation and to the position of Irish Life on many occasions. Irish Life is the most successful company of its type on this island, and perhaps even on these islands. The State holds a 51 per cent share-holding in Irish Life. I am delighted with that and I will fight to preserve that type of arrangement but I have one question: If we own 51 per cent why do we not get 51 per cent of the distributed profits? In other words, Irish Life is a classic example of a nationalised industry which operates in a way which I, as a supporter of nationalisation, do not accept because it makes it too easy to sell it off on the basis of what it is worth.

What is likely to happen is that within the next 18 months the Government will bring in a proposal to allow Irish Life to be sold off to private industry. It will be bought by people who will pay us, let us say, £250 million. It will look good in the books and it will seem like a very attractive proposition but the fact is the people who buy it will insist on getting their profits on a year-by-year basis, to which they are entitled, and we will have lost the argument. I would say in those situations, let the State take its profit now on a year-by-year basis. What is it worth to us to have a State involvement in the Trustee Savings Banks? Let us make it worthwhile for the State and for the taxpayer. I know that goes contrary to the thinking of the trustee arrangements etc., but I raise it.

I want to have confirmed to me that the same liquidity ratio which applies to normal commercial banks in terms of the relationship between deposits, overdrafts, loans etc., will in future be the same for the Trustee Savings Banks as it is at the moment for the commercial banks. What I am asking is that the Central Bank should ensure that precisely the same conditions and no more are placed on the Trustee Savings Banks as are at present placed on the commercial banks.

The difference between the banks is a theme which I have to come back to every time because the Trustee Savings Banks are seen as different. I do not know if the Minister ever had the experience of trying to transfer money from one of the main banking groups to the Trustee Savings Banks. It can be a bit of a job at times, although I know they have got their Act together a bit. I do not know whose fault that was. Was it the big bad commercial banks sitting of the State minnow? Why is it that there has been — it is not quite as bad at the moment — this block on the transfer of money from the normal commercial banks to the Trustee Savings Banks? I am talking about Bank Giro or credit transfer. I would like to know how that is to operate in the future. I want to be assured that this legislation will make clear that the cartels cannot put the boot into these in any non-commercial way.

The other point is the arrangement for the clearing of cheques. Until recently I understand the Trustee Savings Banks were not involved in the normal clearing of cheques. They had a system of their own. It took a bit longer which was useful to those of us who were operating our very dicey overdrafts and working out the number of days it took to transfer from one to the other. At one stage I had it down to a fine art.

It does not apply to the Senator.

Although it acted to my benefit on most occasions I still have a certain resentment about it. I believe we should protect the Trustee Savings Banks even if it means nasty letters going to people like myself, which does not make me unique among politicians. I raise these questions perhaps in a facile way but they are serious basic issues to which I want a response.

There is another question I want to raise. I have not got the Central Bank Act with me. The Government kicked it through with contempt for this House earlier in the year without proper, due discussion.

You walked out.

We will not go into that history, that black day for this House. I did not get the chance to study that Bill as I would have liked. I am certainly aware that under the legislation which was amended by that Consolidation Act the number of bank branches which may be opened in any one year by a bank is restricted, from memory I would say to two or three. I listened with interest to Senator Fallon looking after his own and the Minister's constituency with new branches in Longford and a couple of other places. Of course, my evil mind thought if they are to be restricted in the number of branches they may open, I hope there will never be political interference — I know the Minister would not involve himself in any way — in deciding where those branches are situated. Will the Trustee Savings Banks be limited in the number of High Street outlets they may open in any one year? Are they subject to the Central Bank legislation on this matter or are they free agents as trustees? It is important in terms of servicing the needs of people, particularly the small punters around the country. The essence of the Trustee Savings Banks in so many ways is dependent on a wide retail distribution network which, of course, is costly as well.

In the past month a new bank has been set up and has come into operation in the UK. It is unique among banks in that it is quite contrary to what we are talking about today, this is, a bank that does not have any branches at all. That is its great claim to fame. You can do your business 24 hours a day, 365 days a year through the means of technology. It is an electronic bank. It will provide a 24-hour service throughout the year. It is of vital importance that the Trustee Savings Banks become totally electronic banks parallel with their High Street outlets. I think both those developments must go in parallel.

The banking system is different in many parts of the world. People who do not have the experience of going to banks in other countries do not realise quite how liberal is the banking system here. Before the Euro-cheques came in if you tried to get a cheque cashed in Germany it could take an hour and a half. That gives an understanding of the sort of old-fashioned, fuddy-duddy attitude there is to banking in many parts of the world. One way around this is through electronic banking. I want to tie this in with the facility which is being made available in the Bill to allow involvement in international banking. I get confused when I see legislation which facilitates the international movement of labour, capital, finance, whatever it happens to be. I understood that under the Treaty of Rome this activity could take place anywhere. I would like the Minister to explain if this is simply tidying-up legislation in order to bring us into conformity with the requirements of our European partners and involvements, or is it something which is necessary in its own right.

The idea of a bank operating without international contacts and access is almost a contradiction in terms. We have now reached the stage where there are no national banks anymore. There is no Dublin Stock Exchange anymore. These terms are out of date. It is as easy to buy shares in Irish companies in Cologne or London as it is to buy them in Dublin at the moment. It is a European Stock Exchange with branches in various cities. Where does that leave the Trustee Savings Bank?

I raised the question earlier about the connection between this legislation and the proposed companies legislation which began as a Bill here and is now being dealt with in the Dáil. Since it left us a number of proposals have been addressed. One of those leads to a very complicated position. That is that within a year we will have passed legislation which allows companies to trade in their own shares. I am not sure whether that applies to private companies as well as publicly quoted companies. I do not want to go into details of how that operation works because it is very complicated. Companies will be able to buy up their own shares. This will allow them to have greater control over their profits. What would happen under that legislation if the Trustee Savings Bank decided that it wanted to buy from the Minister for Finance some of his 51 per cent shares in the company? A section of the Bill restrains the Minister from disposing of shares which would leave him holding fewer than 51 per cent. Another section of the Bill allows the Trustee Savings Bank to set up companies.

I presume that the ownership of those companies would also reflect the ownership of the parent company and that the Minister would have a 51 per cent at least interest in each one of those companies. I do not know if that is the case. It is not spelt out in the Bill. I certainly want to know if that is the case. If they are set up as companies under the new Companies Bill and if that new Bill also allows the company to deal, trade and buy its own shares which legislation would then take precedence. Would it be the one which says the Minister may not dispose of more than 49 per cent of the shares or the Companies Act which says that the company may buy or trade in its own shares? I would like that to be seriously addressed. For me there is some conflict there.

As regards the setting up of companies, I welcome that as a most progressive development. This brings me back to my original thesis of the restraints that have been put on semi-State companies over the years. The best example I can give is the comparison between the ESB and Aer Lingus. In the original legislation there was one significant difference. The Aer Lingus legislation allowed them to set up their own companies and hence their success in having strings of hotels in America or catering companies in Dublin Airport or companies like Airmotive on the Naas Road, and so on. They have been allowed to set up commercially significant, viable, profitable and successful industry. The small traders of Ireland in the twenties did not want the ESB to be set up in the first place and because of the pressure they were able to put on Governments at that time the ESB were not allowed to sell coal, among other things — just to bring the Minister back to Clare on an issue which will be of interest to him.

Last year we passed legislation to allow the ESB to set up their own companies. Before that they were in an utter mess. For example, they were tendering for the setting up of electrification schemes in places abroad. Because the legislation did not allow them to set up companies they had to get companies set up in Saudi or wherever, in which they did not have the controlling interest although they did have to underwrite all the expenses of the company. It had to be underwritten in a way that it did not come back to the parent company; this was impossible. It meant they were acting illegally for years and years. Their hands were tied and they were not able to compete internationally. That is what can happen if a semi-State company are not allowed set up their own companies. That is one of the reasons why I welcome this development in this legislation which allows them to set up their own companies.

There are issues which concern me. One has already been raised by Senator Doyle. That is the writing of regulations arising from various sections of the legislation. Whether it be dealt with by the Oireachtas by a positive or negative process is a matter that should be of concern to every parliamentarian. I am not getting into a discussion about the Minister for Finance or the Oireachtas. The positive process is the one where the Minister comes in and says he proposes to make these changes and it has to be approved by vote or otherwise of the House.

An affirmative order.

The affirmative order has to be approved and accepted by the House. The negative process is where one picks up the Seanad Order Paper any day, turns to the back page and sees a series of perhaps — today there are 16 — laid before the Seanad. This might be regulation, statutory order or whatever. There is never a reference to them in the House by any Member. I often check them out in the Library to see what they are about. I have found some interesting things going back to old pieces of legislation but nobody knows about them.

The negative process is that parliamentarians have to check those every day. If they do not like what is there they go back to the main legislation and find that they have so many sitting days to get the House to reject it. Of course the House will not reject it because the House will not be able to get it on the Order of Business. In effect it is a clandestine operation. The Minister says he is going to make a certain change. He sends it on to the Chief Librarian. That is it done. It will appear on the Order Paper, the Librarian will contact the Clerk of both Houses and ask them to include it in the Order of Business on one day next week. It is included one day next week, most people never notice it and within 21 days it is gone. That cannot be an acceptable process. I have given the worst aspect of it there. I am not saying the Minister would be trying it on, but not all the wisdom is deposited or invested in the advisers of the Department of Finance, good and all as they may be, and let me rush to the defence of goods, hard-working public and civil servants. Nevertheless, there could also be some expertise outside that area, maybe even in the Houses of the Oireachtas, people who would point out some little difficulties. Therefore, I think these matters should be discussed——

The Senator is in the wrong job.

——particularly in this instance where it is restricted to three years. It is not much to ask. It is not like a wedding ring, it is just a three-year involvement. Could we commit ourselves to looking at it from that point of view?

In section 58 of the Bill the formation of new companies has to be done through the affirmative process. Therefore, both practices are included in the proposed legislation. Could the Minister say why one is more important than the other, why one is different from the other? It is a very straightforward, straight up question. It seems to me there is no good reason for having the different processes in the one piece of legislation when the two issues being dealt with are quite close in this issue. Section 4, as I understand it, will deal with fairly substantial issues.

Section 5.

Sections 4 and 5 are the two sections I am talking about. The regulations are based on section 4 and explained in section 5. They are fundamental issues. They are as fundamental as the setting up of a new company. Certainly they are important in this legislation. I would ask that that would be considered.

Part VI deals with amalgamations. I approve the requirement of three-fifths as opposed to the three-quarters previously. Is this three-quarters of the shareholders, of the trustees? Are we talking about the small group of trustees in this case? Where will that relate? I am back to the Companies Bill again. What happens if the legislation allows the Trustee Savings Banks to set up other companies which may have shareholders and where shareholders have certain rights which, according to this legislation, might well be usurped by the trustees? Can that happen? I think it can as I read the legislation. I am sure the Minister will tell me that it cannot. I certainly would like to hear an explanation of how that will work out.

Senator Fallon and others have welcomed the opening up of the Trustee Savings Banks, allowing them out to the marketplace, allowing them to do their own thing, to give the service, to compete with the big boys. It is all very well until one reads section 6 where they are allowed to merge with each other; it is sort of incestuous. What happens if they spot another small bank somewhere else which they feel they could take over, a bank in trouble, and they want to buy it? Can they take it over? Can they compete on the commercial market? As I read the legislation, they cannot. Why are we restricting them? Many of us here at the back look forward to the time when the Trustee Savings Banks will be running the banking in this country and we feel that now is the time to make a start on that and allow them to move forward on this issue.

The question of mergers also arises in this case. Under this legislation can we enable the Trustee Savings Banks to merge with other banks — as opposed to a take-over — to merge with other non-trustee banks? Can that happen? If not, why not? As I read the legislation, it cannot happen.

Perhaps the Minister would indicate the thinking of Government. In other words, I do not see it as any protection to the depositor. I do not see it as any protection to the development of the Trustee Savings Banks. I see it as a fetter. I see it as something that retards and restricts progress. I want to know why. I always worry when I see the semi-State companies, or those companies in which the State has a major interest, not being allowed do the things the private sector can do. If we are going to have restrictions let us restrict people at all levels equally and give them all a fair chance. I would like to hear it developed further.

In regard to the transfer of power from the Minister for Finance to the Central Bank, my immediate response is a positive one. I would be happier that it should be treated like other banks. I believe the Central Bank is the place in which that power should rest. It raises two fundamentals. First of all, precisely what power are we handing over? What are the precise details of what are being transferred? What is it that the Minister can do now which will in future be done by the Central Bank? Those are very clear and fundamental questions.

There is something more menacing and more worrying down the line. I am back to Europe. The Government are in deep discussions at the moment with counterparts from the other 11 members of the Community and talking about having one currency, one central bank, one great big financial milieu in Europe. What happens to our little Trustee Savings Banks in that milieu? We are not actually transferring the powers from the Minister for Finance to the Central Bank, what we are effectively doing today is transferring the power from the Minister for Finance to the European directorate dealing with finance, or the European Central Bank or whatever is going to be there in place of the national central banks. That is clearly what is envisaged. I hope the Minister will not attempt to deny that. Everybody knows what is going on. The point I have just made has not been adverted to. It creates problems for depositors. I want to hear that discussed.

Senator Doyle raised a question which is very close to my own heart. This is the growing and creeping "ageism" which is manifesting itself in our legislation these times. What happens when you reach age 70? I am fast approching it myself. This Bill contains two little gems of "ageism". It says, first of all, that when you reach 70 you can no longer be a trustee. Why? What is the magic about 70? I am aware that is has been downhill since 40. I do not have any aspirations to be a trustee of a Trustee Savings Bank at age 70, but if I were to be one at 69½, is it that I would be considered to be non compos mentis or what happens at age 70? Somebody appears to pick these figures arbitrarily out of the air. One can either do the job or one cannot. It is not like being in a particular job or being a member of the public or Civil Service or whatever.

In section 41 we have something similar, but in the other direction. We are told that a person of full age may bank. If somebody walks into a bank with money is that not enough? What is the thing about "full age"? Why do we need that added in in section 41? I would like to hear a definition of "full age". It must be a legal one. Maybe it means 18, maybe it means the age of criminal responsibity, age seven. We have all different sorts of ages in our legislation. What does this mean and why is it necessary to tell somebody that he or she is entitled to deposit money?

I want to finish up with one gem in this legislation which I am very pleased with and which represents a very positive progressive attitude from Government. I know it will be close to the heart of Senator Norris who has been asking the Government to deal with certain issues arising out of a judgment from Europe. It states that for the purpose of this section, a person is connected with a trustee of a Trustee Savings Bank if, but only if, "he is a Trustee's spouse or he lives together with him as a spouse". We think that is progress. I will have more to say about this in the future.

Debate adjourned.