Skip to main content
Normal View

Seanad Éireann debate -
Thursday, 9 Dec 1999

Vol. 161 No. 14

ICC Bank Bill, 1999: Committee and Remaining Stages.

Section 1 agreed to.
SECTION 2.

Amendments Nos. 1 and 2 are cognate and may be discussed together.

Mr. Ryan

I move amendment No. 1:

In page 4, subsection (1), line 2, to delete ", 1963 to 1999".

This amendment arises from a discussion I had yesterday with the Minister of State concerning the Companies (Amendment) Bill. In the Schedule to the Bill there was a reference to items of legislation, most of which were identified by their titles and the years in which they were passed by the Oireachtas. The exception was the Companies Acts which had no date references. My advice was that it was incorrect to cite the Bill without the relevant years being added, and that it should have read "the Companies Acts, 1963 to 1999". The Minister of State argued very cogently and comprehensively that the amendment was unnecessary because of the nature of the Companies Acts and because in those Acts, which we all accept is very complex legislation, it is stated that they may be cited together as the Companies Act. It is, therefore, a surprise to find that twice in this Bill – in section 2 and in section 5 – there is a reference to the Companies Acts, 1963 to 1999. Committee Stage is a very important Stage of any Bill and I think there ought to be consistency in legislation. If the reference "1963 to 1999" was not necessary yesterday in the Companies (Amendment) (No. 2) Bill, then it is not necessary today in this Bill. Therefore, I move that the reference "1963 to 1999" be deleted, as apparently was the advice of the parliamentary draftsman as late as yesterday afternoon.

I am delighted to have the opportunity once again to have a debate on this matter with Senator Ryan. We discussed this yesterday and the advice available to me was that it was unnecessary because we were dealing with company law.

Mr. Ryan

No.

The Companies (Amendment) (No. 2) Bill was going through and any reference to companies would be construed as all Companies Acts. I am advised today that this is a financial measure and that because we are not referring to Finance Acts we must include a de facto reference to the Companies Acts of 1963 to 1969. I would agreed with Senator Ryan that consistency is very important and I would like to be as consistent as I can. I accept the advice available to me that there is a distinction between company law and financial law. On the other hand, I was surprised to see this amendment tabled in view of the fact Senator Ryan wanted this included yesterday but does not seem to want it included today. I hope we can both be consistent and can agree that, because this is a financial measure, we can consistently refer to the Companies Acts, 1963 to 1999, and ensure there is no doubt about what is intended in the legislation.

Mr. Ryan

The difference between me and this Government is that I learn from my experiences and I do not make the same mistakes over and over again. I was informed yesterday that "Companies Acts" could be cited in a different fashion in legislation, not because they were being cited in a Companies Bill but because of the nature of the legislation. I do not accept there is a difference between financial and company legislation in this regard. The truth is the amendment could easily have been accepted yesterday but somebody in the parliamentary draftsman's office did not want it, and somebody else, with a different view, made a different decision for this Bill. I advise the Minister of State not to let people tie up him up in too many knots.

I am being perfectly consistent. I accepted the advice given yesterday. I did not even push it to a voice vote. The Minister of State read out large chunks of the Acts yesterday and gave me a very helpful education on a number of issues in company law. However, that does not get away from the point that, according to yesterday's information, there is no need to have a reference to "1963 to 1999". I have no intention of pursuing the matter any further. I simply want to advise the Minister of State he should remind the parliamentary draftsman's office that we appreciate consistency and do not think there should be contradictory references in Bills taken on successive days.

Amendment, by leave, withdrawn.
Question proposed: "That section 2 stand part of the Bill."

Will the Minister of State clarify the situation in regard to the employees? I gather the employees were given these shares in return for certain work practice changes and on certain conditions. Will the Minister of State spell out those conditions? It was in exchange for the cessation of certain work practices in ICC.

Was there any indication to the Department that the deal done with the employees was in some way damaging to the sale? In other words, did any of the prospective purchasers express any reservations whatsoever about this particular deal with the employees, that is, the donation of 15per cent per cent of the company, the agreement there would be no redundancies for a certain period and the agreement on other work practices? Was any reservation expressed, either verbally or in writing, by any of the ten prospective bidders?

From the information available to me, nobody expressed any reservation pertaining to the proposal to transfer some shareholding to the staff. We would have been selling the State's shareholding to the prospective purchaser. Part of the conditions agreed for that sale was that 14.9per cent of the State's shareholding would be divided among staff – 5per cent in return for a change in the bank and 9.9per cent through purchase by the staff, in other words, the staff would be handed 5per cent for the change and had the option to purchase 9.9per cent. That was part of the asset disposal conditions on which the Government authorised the Minister for Finance to proceed.

The prospective purchasers knew they were buying an asset worth £x and that conditions were laid down. Part of that asset was the human resource talent and expertise available in that institution. As an acknowledgment of the role played by the expertise and ability of its management and staff in the growth of the bank over the years, they would be part of the transfer. All parties to the purchase seemed to be satisfied it was a fair and reasonable deal and nobody expressed any difficulty or said it would be an impediment to the conclusion of the deal.

Shares were not being given to the employees – this was linked to the purchase arrangements, in other words, this situation would only happen if there was a purchase. The present proposal has fallen and the future is now unknown. We must return for a reappraisal, have discussions with management and staff and wait for the report from the board of directors. In that situation, the Minister will take other decisions pertaining to the present and medium future.

The Minister of State did not answer a single question I asked. I will ask them again. First, what was the deal with the staff? What did they have to do in reciprocation for this 15per cent? The Minister of State said it was part of the transfer. I understand that certain practices had to be changed and that certain guarantees of no redundancies had to be given by the purchaser. Is that correct? I need to know this. It is fair that we know this. It is not outside the public arena because the Minister would know this if it was his Department.

The second point is very important. The Minister of State said in reply to my question that, from the information available to him, he did not know of any reservations expressed, verbally or orally. Is that correct?

Is the Minister of State in possession of all the available relevant information? I want an answer of yes or no to that.

I always give the answers I have.

Mr. Ryan

The issue raised by Senator Ross could be very serious if the Government is sending a Minister to this House who does not have access to all the information. It would be fine if a Minister wanted to say, "No, I will not tell you", because we could then pursue that in various ways. However, if a Minister is sent to this House without being in full possession of all the relevant information, which enables him to say he does not have any information in his possession, we are in a very serious situation because it means that Minister is not in a position to deal with the legislation. If a Minister wants to say, "I will not tell you because I believe it is confidential", that is not a very nice answer but it is a fair one. However, playing around with the use of words is a different matter.

Senator Ross asked a legitimate question about the conditions of this deal. I am quite keen on these sorts of arrangements and most trade unionists regard them as a reasonable response to their increasing flexibility in their work. However, I do not think they should be private and secret, no more than anything relating to how we do our business, in terms of arrangements for finance, travel expenses and so on, should ever have been secret. I never believed in that.

With the enabling provision for an ESOP out of the way, if ICC is to be sold in the future, will further legislation be needed?

I can answer the last question immediately. If we are to sell ICC in the future we will, of course, have to return to both Houses of the Oireachtas with legislation. We cannot dispose of a State asset without the permission of the Oireachtas, which means we would have to return to the Houses with new legislation.

I can categorically state there is no indication whatever on the file pertaining to this issue that anybody expressed a reservation about the conditions being laid down in regard to the staffing situation. The two final bidders had discussions with management and unions. They accepted there was to be a 5per cent allocation on the transfer in return for the staff agreeing to the change from a State owned operation to a private sector operation. They agreed that there was to be a 9.9per cent allocation for purchase available to the same staff on the basis that they would be in a new environment and it would consolidate their position. In return for that, a guarantee was given that there would be no redundancies in the institution for at least two years after the ESOT had commenced after the acquisition.

The Government authorised the Minister for Finance to enter into negotiations with the staff of ICC Bank plc on an employee share ownership plan. These negotiations were concluded last July and resulted in agreement. The staff were to get 5per cent of the State's shareholding in return for change in the bank, consisting of changes in work practices and improvements in productivity. These changes were set out in a transformation agreement. A further 9.9per cent was to be available to the staff if they wished to purchase. It was envisaged that the staff would purchase these shares through a combination of the capitalisation of their pension contribution and a loan for the balance which the staff would raise themselves.

Each tenderer was asked to set out its views regarding the various issues in the tender process. Both final bidders met with the unions. They recognised the unions and their role. There did not seem to be any difficulty at the finish. Was there any other question?

No, but there are supplementaries.

There have been figures floating around in the media. I notice how Senator Ross seemed to think that the contributions of the House were press office contributions. I have been around for a while and I did not think that. I thought they came from sincere Members of this House who spoke with the information available to them and their knowledge of the problem. I was impressed with the sincerity of contributions. For the past few days figures have been bandied about in the press pertaining to what the staff will get. They are grossly exaggerated.

I accept that. I thank the Minister of State for the categorical assurance he has given. It is satisfactory. I also thank him for telling me about the two year redundancy rule. Could he spell out for me what the employees were doing in return? He did not give me any indication of that. We only know the one side. What work practices were being changed? What productivity was changed? That is important. He said it was in a new environment and a consolidated position, which is a real Treacyism that does not mean much.

While I accept what he said about there being no expression of opinion by any of the banks or reservations about these work practices, could he tell me why did they withdraw from the bidding process? It is not satisfactory for a Government Minister to say, "I do not know".

Why did they withdraw?

I thought I covered that in my speech, which I referred to when the Senator was absent from the House.

I want it in detail.

Everything I do is in detail.

This is a serious sale which has gone wrong. The first thing we need to do is analyse the reason it has gone wrong. As Senator Ryan said, if it is to be put up for sale again, which is a possibility, we must know the reasons the last ten people withdrew.

With regard to the staff, negotiations took place that were concluded in July and they were acceptable to the purchasers. There was a transformation agreement which covered product cross selling, flexibility, rostering, voluntary redundancy and early retirement.

What did the staff have to do? The subject has been covered.

From the information available to me it seems that the ethos of the bank is one of positive productivity and modernisation and innovation in their performances. They had to make some slight adjustments in their performance. The staff were happy to do that, their unions agreed and the purchasers were prepared to accept that.

They had to improve their performance.

Yes. Everyone must try to improve when there is an incentive to perform.

By how much?

I do not know the percentage. I cannot answer that.

Could the Minister of State find out?

I can seek to find out. If I get the information I will convey it to the Senator.

It should be available information.

I will see what can be done. The Department of Finance's press release dated 6 December states:

The Minister for Finance announced today that he has decided to withdraw ICC Bank plc from sale for the present. The Minister will now be consulting the board and staff of ICC Bank plc with a view to bringing forward proposals for the future of ICC Bank. The Minister will also be proposing appropriate amendments to the ICC Bank Bill, 1999. . . .

These amendments are being dealt with now and are currently before the Oireachtas. They are about to be concluded in this House.

. . . . The Minister explained that the developments in the banking sector since the tender process was initiated had been a factor in the decision. Bank of Ireland has acknowledged that it views ICC Bank as a first rate bank with its specialist market segments. However, Bank of Ireland has come to the view that acquiring ICC Bank is not the best way for it to develop its SME lending business today.

There are two reasons the Bank of Ireland withdrew. First, it did not see the ICC Bank as a perfect fit for its operations at this time, taking into account the modern Irish economy. Second, the Minister for Finance was not satisfied with the amount of money on the table.

What was the price?

We had not agreed a price.

What was the bid and what was the price offered?

When it is inconclusive then the deal has not reached totality. I could bid on Senator Ross's house and he might agree to sell. Perhaps if he met Senator Ryan at a social occasion tonight Senator Ryan might tell Senator Ross that he is not getting enough and then Senator Ross could change his mind tomorrow.

Mr. Ryan

I would be the last person Senator Ross should take advice from.

There was no conclusion. Senator Ross has an interest in the financial area and I value his professionalism and input. I will put it to him this way. Next year is a leap year and there will be 366 days in the year. If the Senator was paid £1 million for each of those days he would be in the ballpark at the negotiations. I can go no further than that.

I am grateful for the Minister of State's sense of humour.

It is not so much a sense of humour as a sense of assistance.

In another life the Minister of State was an auctioneer. Is that correct?

I did dispose of property and I was also involved in financial management.

The Minister of State may have done that extremely well, perhaps better than answering questions in the Seanad. It is unsatisfactory that we should not know. I am trying to get to the bottom of why this failed. The press release that the Minister of State read out is mumbo jumbo. It is PR speak and he knows that as well as I do. It is nonsense. I want to know how this thing was cocked up so badly. Let us put it another way. There was an indicative bid from the Bank of Ireland of £350 million to start with. Is that correct?

The Senator is in the ballpark.

Is that correct?

It is not de facto. I know it is around that figure.

What is the figure?

I do not have the figure exactly.

We should not have a Minister here who does not have the figure.

Why not?

Because we want information from Ministers and we want Ministers who are competent in the area which they are sent in here to talk about. I have great respect for the Minister of State in his own sphere and in every other sphere, but if he does not know the figure then he should not be sitting there taking this Bill through. It is an insult to this House to send in people who are not well versed in the Bills and their details. That is not his fault because he has got a job to do but it is wrong. It is something we should consider seriously. He should let us know what was the Bank of Ireland bid as an indicative price. The figure of £350 million is being bandied around as the indicative price. We should stop these rumours and get down to facts. It is also being said that the Bank of Ireland withdrew its bid when it was the only bidder, which is a perfectly logical thing to do, and reduced its bid to £200 million, a difference of £150 million. All the Minister of State has to do is say that is or is not the truth and it broke down on price. We do not even know whether the Bank of Ireland changed its bid. Did it leave its bid of £350 million? What was the Department's attitude?

My conclusion must be that the bank withdrew its £350 million bid, otherwise the Minister for Finance would have sold it to them. I need to know whether I am right or wrong for the future, as do other Members, that this deal did not fall down on anything except on price. It is not convincing to believe the Bank of Ireland are saying suddenly they have decided that ICC Bank is not a fit. It was a fit six months and it has not changed.

I am disappointed that Senator Ross is becoming aggressive on this issue. He referred to my former career. I was also a financial manager for a number of years so I have a reasonable knowledge of the industry. Senator Ross is a shrewd man and there are wise people in this House. There are three values for every property – the real value, the price professionals decide the property or institution is worth; the notional value, what people like the Senator may ascribe to the value of an institution, property or an asset, and the purchaser's value, that which the purchaser is prepared to pay. Let us say that the notional value may be indicative and let us say that the purchaser's value was the conclusion arrived at. We did not arrive at that conclusion. Bank of Ireland withdrew and by withdrawing, withdrew its bids and, therefore, there is no figure now.

What were the figures then?

The original figure that the Senator used is very close. I was not privy to those negotiations or a party to them. There is a real value of this institution, people put an estimate on that value – the Senator has put a figure on it and is very close to it. Based on the fact that there is now no bid, there was inconclusion, so to speak. There is no figure to report because a figure was not agreed on.

This is nonsense, complete and utter fairyland. There is no final figure because there is no deal, which we all know. I want to know the final bid and the final offer, that is all. There must have been that. What did Bank of Ireland do with the £350 million bid? Did it make no bid after that at all? Did the State not make any offer? Is the Minister of State saying categorically that the negotiations did not reach that stage?

Mr. Ryan

First, I take issue with the Minister of State. He may think that there are three ways of putting a value on a piece of property. In market economics there is only one, which is the price agreed between a seller acting freely and a buyer acting freely – market economics accepts no other. It is typical of the confusion of the Government, which claims to believe in the market economy, that it does not understand how it works.

Second, the Minister of State is entitled – I do not agree with it – to decline to answer the questions asked by Senator Ross. He would be better to say, "No, I won't tell you", and other routes might be pursued. There are figures in the Department from which this legislation emanates. Those numbers indicate precisely the figures for which Senator Ross is looking.

There are two things the Minister of State can do. He can either refuse to give the figures or give them, but he cannot pretend they do not exist because we know they do. Even this Government cannot deal in selling a bank without having an idea of what the prospective purchaser wants to pay for it and what the Government hopes to get for it. Even this Government will have gone as far as figuring out those two figures and they are written down somewhere. The simple answer is, "I won't tell you", or the Minister of State should tell us what they are.

I want to be as factual as I can with the information available to me and I have no difficulty with that. I will now reply on this issue. Senator Ross referred to a figure. There was an indicative bid of circa. £350 million – the Senator is correct there. We then went the final process, where Bank of Ireland was to put forward its final offer and then it withdrew.

That is it then.

There was no other offer at all?

That is the position.

There was no other offer.

Mr. Ryan

The Minister for Finance informed Bank of Ireland at that stage that he was not happy with the price. What was the price he was not happy with? The indicative price of £350 million? The Minister of State says there was no other price. Why did the Minister suddenly become unhappy with the indicative price that was originally very satisfactory?

Bank of Ireland made, as others did, an indicative price but Bank of Ireland did not come to the table with the final price offer. There were suggestions that they may produce a particular figure which was not satisfactory to the Minister to allow them to come to the table.

Mr. Ryan

Let me sort this out. The Minister of State should have said that the Minister for Finance informed Bank of Ireland at that stage that he was not happy with the suggested price that was floating around that nobody really knew.

What is it?

Mr. Ryan

What is the price? The Minister of State has told us that the Minister for Finance informed Bank of Ireland at that stage that he was not happy with "that price"– not a range of prices, not a vague idea but "that price". What is that price the Minister for Finance was not happy with? The Minister of State is perfectly entitled to decline to tell the House – I will not agree with him but that is a fair enough answer. However, it is not correct to say there was no price when he has said there was.

The Minister for Finance never received a final price offer from Bank of Ireland.

What is the price to which he was referring?

The indicative price. The oral indication that they were coming back to the table with a final offer which never materialised.

But how could he be dissatisfied with it?

He was dissatisfied with the indications available from the bank.

Mr. Ryan

The Minister of State is saying that the Minister for Finance would not sell because they were offering him nothing. He is a very decisive Minister. That is what he is saying – there was no offer and, therefore, it was not sold. There was a price. Perhaps they will not tell the Minister of State, but there was a price.

There was.

We are having repetition at this stage.

Supposition as well.

Seemingly the indicative offer was £350 million but it would appear that Bank of Ireland were trying to talk down that price. What was the price to which they were trying to talk it down? They must have offered something to the Minister which he felt was not acceptable.

Correct.

That is the bottom figure we are looking for.

Correct. It is not acceptable. The Minister of State has referred to a price but he will not tell us what it is.

Mr. Ryan

This is a very serious issue. A Minister of State has come into the House and delivered a speech. It is only Ministers who are entitled by the rules of this House to use a script because they are enunciating Government policy. The Minister for Finance informed Bank of Ireland at that stage that he was not happy with "the price which they put on the table". The Minister of State said the price did not exist at all. His script says that he was not happy with the price they put on the table. Is that true or not?

There was an indicative price.

Mr. Ryan

So he was not happy with the £350 million?

That did not come into play until the final process was reached. The Minister was not happy with the indications from Bank of Ireland as to what they were going to offer at the final process.

What were they?

Mr. Ryan

What were they?

That figure is not available to me. I do not have it.

The Minister of State should not be here then.

I should not be here?

No. Someone to whom it is available should be here.

That is immaterial because it was inconclusive.

Mr. Ryan

No it is not.

It is not immaterial at all. This is absolutely ridiculous. He does not know what that price is because he is not from the Department. He is a very good Minister of state at many other things. If there was another Minister here, according to him, he would know. Would the Minister for Finance know?

The Minister for Finance knows, but he is in Helsinki.

All right. Can the Minister of State find out and let the House know what that price is?

I will seek to find out but I cannot guarantee that I will procure that information. I will try to get it. If I can convey it, I will.

We now have a position where a Minister attending this House is not properly briefed. There is never any clearer evidence than this.

Senator Ross is now getting into the area of repetition. We have progressed this matter as far as possible and I must put the section to the House.

No. I have other questions unrelated to this, even if you wish to rule that one out of order. The other questions are completely different. Could the Minister indicate the reasons why the other nine banks withdrew?

I do not have any reasons for the withdrawal. I do not have any reasons whatever for the Senator but to say there were three banks at the finish and once we went to final stage process, one bank immediately withdrew and then another bank withdrew. We were left with one bank.

The Senator will understand, as someone involved in the financial world for many years, that confidentiality clauses are involved. I am not privileged with the information the Senator seeks The confidentiality clause is involved. All I can tell the Senator is that the indicative bid is very close to the figure to which the Senator referred. The confidentiality clause means that information is not available to me. I have no information to indicate why any other bank withdrew. In a free market they had the right to withdraw. As the Senator knows, until one signs the contract one is not bound to honour it. Only then does it become binding on both parties.

I thank the Minister of State. This is not quite the answer to my question and I should perhaps be a little more specific. I asked the Minister of State why they withdrew. He said they are entitled to withdraw and that is so. However, that is not relevant. This has been a shambles. Ten banks indicated some interest but all have disappeared. We are still landed with ICC Bank and it is still for sale. We have to learn something from this. I can understand confidentiality and why the Minister of State says he cannot give specific information. However, ten banks withdrew and we do not have specific or general reasons any of them did so. What lessons have been learned?

Ten banks showed an interest and, for some reason, they ran out of the room in horror at the prospect of buying ICC Bank. The Government claims it does not know why and that they are entitled to do so. The least the Government can do is to give the House the specific or general reasons. Perhaps the economic climate is wrong, perhaps ICC is too small or did not fit any of the banks' interests. I do not believe the latter as they would not have shown an initial interest if that was the case. However, we are entitled to know whether the Government has learned anything from the withdrawal of ten banks and what it is going to do about it in the future. This is not a semantic point, it is very important, and it is not acceptable for the Minister of State to claim that the banks were entitled to withdraw. If ICC Bank is going to be put up for sale we must know what the selling points and the minus points will be, and how we are going to market the sale differently.

The Senator has much knowledge of the financial industry and he will understand that the Government proposed to dispose of ICC Bank and ten different institutions indicated an interest. I do not know why they expressed that interest – it may have been for reasons of commercial sensitivity or competitive advantage – we do not know. After the prospectus and the information were issued, seven banks did not proceed to the next stage. We could write to them and ask why, but they do not have to answer. In any case, that information would not amount to a hill of beans and would not be of any assistance to the future of ICC. The bank is a viable, solid institution with quality staff, a great portfolio, is well balanced, has the right ratios and I am confident it has a great future. We have to learn lessons. I have a rule that where two or more are gathered we all learn. I am learning in the House today in case I have to deal with issues such as this again. We have learned from this process and I am confident that we will go forward positively.

Question put and declared carried.
Section 3 agreed to.
SECTION 4.
Question proposed: "That section 4 stand part of the Bill."

ICC Bank's borrowing limit has been substantially increased from £2.3 billion to £3.5 billion. The bank's activity has increased over the past number of years and it is expected to increase further this year. Will the Minister of State indicate why the borrowing limit has been increased by so much?

Senator Ross, do you wish to speak on section 4?

I would first like to hear the Minister of State's answer.

The borrowing limit has been increased to this level because the bank has a huge contribution to make to economic activity. It has specialised in venture capital and assisted niche markets. The bank has been particularly helpful to the software industry. Ireland is the world's leading producer of software goods and services. We are ahead of the US and, in conjunction with the Irish Software Directorate and the Irish Software Association, we have set a target to double the industry's employment capacity over the next five years from 25,000 to 50,000. This is one of the reasons there is opportunity in the economy. Taking this into account, the Government believes that the figures are being set at the correct limit and that opportunities exist. This is a vote of confidence in ICC Bank to continue its successful lending policy.

What is the status of an indicative bid in a contract? Are they binding or can one throw in any figure?

They are not binding in the sense that they are not legally enforceable. However, if one makes an indicative bid and the State decides that one is in the frame for the negotiations, obviously those negotiations would have to be based on the indicative bid.

If one makes a bid of £350 million for a State asset or any other asset, can one withdraw that bid at any time and say, "I was only joking"?

Yes. If one wanted to be facetious one could make whatever bid one wished. However, if one is a serious player and one proceeds to the next stage, obviously the bid placed would be within the parameters at which conclusions would be expected.

Would the Minister of State agree that this did not happen in this case?

That is right.

So a certain amount of bad will was involved?

I do not know.

Question put and agreed to.
Amendment No. 2 not moved.
Section 5 agreed to.
SECTION 6.
Question proposed: "That section 6 stand part of the Bill."

Mr. Ryan

It is outrageous that this Bill includes a paragraph about an entirely separate bank which has no connection with ICC Bank. Someone is going to have to give Government in general a few rules about elementary organisation and principles. This is the sort of provision which causes enormous confusion, bad feeling and so on. If the Government wishes to introduce a single paragraph Bill to increase ACC Bank's borrowing limits then it should do so by publishing a separate Bill. If I tried to introduce such an extraneous clause to the ICC Bank Bill, you, a Chathaoirligh, would rightly rule me out of order. It is astonishing that this provision is included.

It is not included in section 4, so will the Minister of State explain why there is an invitation to play the currency market which states that ACC Bank can borrow in any currency it thinks fit, including in a currency other than the currency of the State? My understanding is that the euro is the currency of the State and that the punt is a denomination of the euro since last January. This gives ACC Bank quite a choice of countries in which it can raise funds. Why does it need to be invited to borrow money outside the euro area, incurring an unnecessary risk, given that interest rates in the euro zone are substantially lower than, for example, in the sterling zone? What is the point of stipulating that ACC Bank can do this? I do not see a similar provision for ICC, but perhaps it can do so.

It is not unusual to include an enabling device such as this to ensure that ACC Bank lives within financial parameters and operates within the law.

Mr. Ryan

I know that.

The company is growing and its borrowing requirement is changing. We are coming towards the end of the year and it is a good time to make such a change. We are starting a new year and this provision enables ACC to look forward and to make decisions. When one is introducing a mechanism such as this for a financial institution, it is normal that one does not curtail that institution and that it is given respectability. Who knows what the markets will turn out in the next quarter, half year or year? It is important that we do not have an uncompetitive, hamstrung State institution. We must take every precaution to ensure that this allowance is available to ACC to ensure that it competes on a level playing field. This legislation is designed to allow ACC to grow its business and we will make changes to the figures as required. The same situation has prevailed with ICC. We can look at the pattern over the years when the figures may have been £7 million, £50 million, £200 million and £1 billion. The legislation has been enacted and as the economy grows and currencies accumulate and become more globalised, the old figures are outdated and unnecessary.

It would be illegal for the bank to operate if we did not give it a legal mechanism to allow it borrow a larger sum. This will be added to what has been borrowed already. The bank is close to the limit and will probably exceed it by the end of March. We must take account of that. This is positive and enabling legislation. It is a simple mechanism which is consistently used to ensure no one operates outside the law.

Mr. Ryan

I wish the Minister would answer the questions he is asked. Why is this section included in this Bill rather than publishing a separate Bill? That would be the correct way to do it. Under what circumstances would it be appropriate for a State bank to borrow money outside the stability, in terms of interest rates and currency, of the euro zone? When we had a tiny economy and currency and a market of 3.5 million people, there were good reasons why a relatively small bank such as this, would have to take a currency risk to raise funds. Why are we doing this now when we have a market of 350 million people and a huge economy with substantially lower interest rates than the UK? What is the purpose of this section or was it included by accident?

I do not see any difficulty with this section, which expedites matters. However, I note that section 4 increases the borrowing powers of the ICC from £2.3 billion to £3.5 billion, whereas section 6 increases the borrowing powers of the ACC to £3 billion, from a previous figure of £2.4 billion. In one section the increase is £1.2 billion and in the other it is £600 million. Is there a reason for this or were two separate sections of the Department dealing with it and they included different figures?

I thought I had made it clear. This section is an enabling device which is necessary, practical and operational.

It is done all the time.

Yes. I thought I had conveyed that to Senator Ryan. He said I did not answer the question – I am answering it for the third time. In reply to Senator Bonner, when these figures are considered, one must take into account the current lending circumstances, liquidity, assets, staffing, capacity, etc. The reason for the difference in the figures is that they operate in different parts of the market and obviously have different requirements.

Mr. Ryan

I may be stupid, and it is becoming more apparent to me as I get older that perhaps I am.

That is doubtful.

Mr. Ryan

When would circumstances arise whereby a small bank with a State guarantee would be entitled to undertake the risky business of borrowing money outside the euro zone?

That would be a matter for the board and the management team to decide, including the chief operational officers and the financial controllers. This section replicates the original ACC Acts, which I put through this House. It enables to bank to continue. We have updated the section and increased the figure. It maintains flexibility within normal banking criteria.

Mr. Ryan

So this legislation emanated from the Department of Finance which does not know we now have a single European currency.

No, that is untrue.

Mr. Ryan

As the Minister, Deputy McCreevy, eloquently said here last night, this is a different world. There is no need for a State guaranteed bank to take currency risks to borrow money when we are part of the euro zone which has low interest rates and stable currencies. It is a foolish risk for the State to guarantee and it should not be included in this legislation.

That is a matter of opinion. Ireland has two main currencies. In the Republic, the euro is underpinning and absorbing the punt and sterling is the currency North of the Border. There are three different currency denominations on this small island. We are being consistent. There is no reason to remove the flexibility required by an institution. From a macro point of view, this should be retained. We are maintaining the legal parameters within which a State institution, in this case the ACC, can continue to perform in a growing economy. This has traditionally been done by successive Governments.

Mr. Ryan

The Department Finance made a mistake and included this section without thinking about the position, which is now completely different. It is wrong and indicative of the fact that the Department takes its eye off the ball more often than it should.

Question put and declared carried.
Sections 7 to 9, inclusive, agreed to.
Title agreed to.
Bill reported without amendment and received for final consideration.
Question proposed: "That the Bill do now pass."

I thank the Minister of State for taking this Bill. I am sorry if I made any points which were personal to him – they were not meant to be. I feel strongly that we should establish a principle where a Minister from the relevant Department should take Bills. The Minister of State, Deputy Treacy, is a good, extremely competent and helpful Minister. However, the Leader of the House should note that it is unacceptable for Ministers from other Departments to take Bills. They cannot provide us with all the necessary information.

Mr. Ryan

Like Senator Ross, I have considerable regard and affection for the Minister of State. If I criticised the lack of adequate information, it is for the same reason as Senator Ross – not because of any lack of willingness on the part of the Minister of State, who has always taken this House seriously. It is not right for Ministers with responsibility in other Departments to deal with legislation.

The Minister of State is a courteous gentleman. He is as competent a Minister of State as most in the Department of Finance.

I thank the Minister of State for his attention and patience, which was tested on occasion. I wish ICC Bank well. I dealt with it a great deal in the late 1970s and early 1980s. Despite a reference made here today, as far as I am aware, most of the people I encouraged to bank with ICC Bank repaid their loans. These loans helped them to build up successful businesses in the manufacturing and tourism industry in County Donegal. Without the ICC, these industries would not have developed.

I thank the Cathaoirleach and his staff for their co-operation during the passage of the Bill. I thank Senators Joe Doyle, Ross, Ryan, Bonner and Quinn for their tremendous contributions. I assure Senators Ross and Ryan, for whom I have great regard, that I have taken nothing personally. I appreciate everything they have said and I have taken it in a parliamentary spirit. Having been a Member of the Oireachtas for almost 18 years, I have the utmost regard for this House and for the ability of Members to see legislation in a different light and make a positive contribution. The environment in this House is much better than in the other House in which I am privileged to serve. I value this very much.

Today is important. Of course, we were disappointed that we were not in a position to dispose of ICC. However, this is behind us and there are advantages in every situation. There is at least a 51 per cent advantage in this instance. I am confident that the record of ICC Bank and the confidence the Government and Oireachtas have expressed in it will be returned one hundredfold by the management and staff. As we face the new millennium with great confidence and given the huge economic opportunities in the future, I believe the ICC Bank will continue to play a major role in the economic activity of this country and in bank ing and commercial services. I sincerely thank the House for its co-operation.

Question put and agreed to.

When is it proposed to sit again?

I thank the three Members on the opposite side for their co-operation this morning. The House will adjourn until next Tuesday at 2.30 p.m.

The Seanad adjourned at 2.05 p.m. until 10.30 a.m. on Tuesday, 14 December 1999.

Top
Share