I welcome the Minister of State at the Department of Finance, Deputy Cullen, and his officials. The first item on the agenda is consideration of Committee Stage of the ICC Bank Bill, 2000. For the information of Members, it is proposed to group amendments Nos. 1 to 3, inclusive, for the purpose of debate. Is that agreed? Agreed.
ICC Bank Bill, 2000: Committee Stage.
Sections 1 and 2 agreed to.
SECTION 3.
Question proposed: "That section 3 stand part of the Bill."
Will the Minister read into the record his note on this section?
The purpose of this section is to increase the authorised share capital of ICC Bank plc from its current level of £40 million to £80 million. While a doubling of the authorised share capital may seem excessive, it must be pointed out that this does not mean that the actual share capital of the bank will be doubled; it merely means that the Minister for Finance can subscribe for a higher amount of shares. Each such subscription would still have to be sought and recommended by the board of the bank. The authorised share capital of the ICC was last changed in 1997 when it was increased to £40 million from £12 million, a figure set in 1971. This has largely been subscribed.
The ICC is regulated by the Central Bank and, as with any licensed bank, can only lend up to the limit set by the Central Bank, which depends on the shareholders funds of the bank in question. Shareholders funds consist mainly of subscribed capital and retained earnings. The capital adequacy ratio of a bank is the minimum percentage that the shareholders funds must represent as a percentage of the risk weighted assets. If a bank's capital adequacy ratio drops close to the minimum permitted level, it can neither increase its capital nor stop lending money. The latter option is rarely followed for obvious commercial reasons.
The Minister is committed to keeping the company adequately capitalised for as long as it remains in State ownership. Therefore, it is his intention to subscribe for the shares his entitlement in a £15 million rights issue that the company intends to launch following the enactment of this legislation.
Will the Minister clarify for what purpose the £15 million will be used?
It is the Minister's intention to subscribe for the shares his entitlement in a £15 million rights issue which the company intends to launch following the enactment of this legislation.
Is it correct that the Minister is taking £15 million out of the authorised amount?
Yes.
That is fine.
Question put and agreed to.
SECTION 4.
Amendment No. 1 is consequential on amendment No. 2 and amendment No. 3 is an alternative to amendment No. 2. As already stated, the three amendments may be taken together by agreement.
I move amendment No. 1:
In page 4, subsection (1), line 1, to delete "The Minister" and substitute "Subject to this section, the Minister".
When the current Bill was being drafted, consideration was given to the provisions of the ICC Bank Bill, 1999, and to what happened at that stage. As Deputies will recall, substantial amendments were made to the Bill following the withdrawal of ICC Bank plc from sale. However, prior to that event, a number of amendments were tabled by the Opposition on Committee Stage. One of those amendments - tabled by Deputy McDowell - was to the effect that the Minister could not dispose of any shares in the bank without the general principles of the sale being laid down before and approved by Dáil Éireann. Section 4 of the Bill before us includes enabling legislation provided for the Minister to dispose of his shares in ICC Bank but only after a motion of approval by the Dáil in the event that any disposal of shares would result in the Minister's shareholding dropping below 50%.
The reasoning behind the wording of section 4 was to exclude any requirement for a motion of approval for the disposal of shares by the Minister in respect of the ESOT as such a disposal was already provided for in the ICC Bank Bill, 1999. ICC Bank is a State bank and, in respect of any sale proposal, we were of the view that the key issue was whether the Minister would retain control. Accordingly, we provided for a motion to allow the Dáil to consider any sale proposal which would result in the Minister losing control of the bank.
I have taken into account the concerns of the Opposition which were put forward in clear terms by Deputy Noonan on Second Stage and I am proposing an amendment to section 4. This amendment provides that the Minister must obtain a motion of approval from the Dáil prior to him disposing of any shares, with one exception where he is disposing of shares with regard to the ESOT in the bank. The disposal of shares by the Minister in respect of the ESOT is already provided for in the ICC Bank Bill, 1999. In my opinion the proposed amendment, which received widespread support from both sides of the House on Second Stage, meets the concerns raised by Deputy Noonan.
I rejected Deputy McDowell's amendment last year because we were in the final stages of a sale process. I wish to point out that the amendment I am proposing goes much further than that tabled in his name last year. The amendment he proposed last year was designed to address the general principles of a sale whereas the amendment in my name actually deals with the details of any particular sale. I know that Deputy McDowell is opposed, in principle, to the Bill. However, it is the Government's view and that of many Deputies who spoke on Second Stage, that it is essential if a sale of the bank is to be achieved to have in place the necessary arrangements prior to any such sale. That is why these enabling provisions are included in the Bill.
The amendment I am proposing to section 4 provides adequate protection to all concerned in any disposal of the shares by the Minister. Accordingly, I am happy to commend it to the committee.
This issue was raised on Second Stage and the Minister of State's amendment meets the point I raised. As originally drafted, section 4 would have enabled the Minister to dispose of up to 50% of the shareholding of the bank without reference to the Dáil. The ICC is a State bank and has been seen as one of the better commercial State corporations for a long period. In the past people used to identify with commercial State bodies because they felt they had ownership of them. However, they probably do not identify with those organisations to the same extent anymore.
In my opinion the public believes that, even if he was disposing only of part of the ICC, the Minister of the day would not act unilaterally and that some reference would be made to the elected Members of this House. Regardless of whether the Minister disposes of the bank in its entirety or he becomes involved in a partnership arrangement where the ownership of the bank is shared jointly by ICC and some other bank, the Minister should come before the Dáil and set out what will be the future arrangements and the policy considerations. At the end of the debate, a motion to approve the scheme could be put to the House. That is good practice. It is transparent and ensures Parliament remains at the centre of the accountability process.
I was surprised at the original drafting of the section. I am glad the amendment has been tabled and I agree different arrangements might be necessary for employee share option schemes. That is acceptable and I will withdraw my amendment.
Amendment agreed to.
I move amendment No. 2:
In page 4, lines 6 to 10, to delete subsection (2) and substitute the following:
"(2) The Minister shall obtain a motion of approval from Dáil Éireann prior to making a disposal under subsection (1).
(3) This section does not apply to a sale or transfer under section 2(2) of the ICC Bank Act, 1999, of shares held by the Minister.".
Amendment agreed to.
Amendment No. 3 not moved.
Section 4, as amended, agreed to.
Sections 5 to 7, inclusive, agreed to.
Schedule agreed to.
Title agreed to.
Bill reported with amendment.