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Banking Sector

Dáil Éireann Debate, Tuesday - 1 July 2014

Tuesday, 1 July 2014

Questions (128)

Stephen Donnelly

Question:

128. Deputy Stephen S. Donnelly asked the Minister for Finance if his Department has had discussions with representatives of Royal Bank of Scotland and Ulster Bank to consider the future of that bank in the Republic of Ireland; if such discussions have included a consideration of a merger with Permanent TSB or swapping of assets controlled by his Department as a shareholder in Irish banks and the National Asset Management Agency; and if he will make a statement on the matter. [28073/14]

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Written answers

In Autumn 2013, following a review of its operations by the UK Treasury, RBS reaffirmed its commitment to the Irish market.  As part of that process, Treasury officials engaged with officials from my Department.

In February 2014, I met with RBS executives to ascertain their outlook for Ulster Bank. RBS is currently reviewing the operations of Ulster Bank in Ireland with a view to creating a sustainable business model and on 27 February 2014 RBS reiterated its commitment to the Irish market. As part of its strategic review process RBS announced plans in late 2013 to accelerate the deleveraging of assets contained in RBS Capital Resolution, a material amount of which are assets held by Ulster Bank. 

It is good news that the bank has committed so firmly to the Irish market. Officials in the Department of Finance have been in contact with both RBS and Ulster Bank officials and this will continue as the bank finalises its plans for the future.

With regard to Permanent TSB, the Deputy will recall that a way forward was agreed with the Troika in April 2012 which envisaged it playing an important role in the future of Irish retail banking, being a more focused retail bank bringing an element of competition to the marketplace which has consolidated significantly since 2008. 

While no restructuring plan has been approved, Permanent TSB has made significant progress in delivering key elements of the Restructuring Plan and the business is being managed structurally in the way envisaged in the plan. Permanent TSB continues to work to enhance the value of our investments through the continued delivery of the Restructuring Plan, which will, if delivered, provide the State with more optionality regarding the future structure of Permanent TSB. 

During 2013 Permanent TSB grew its presence and activity in the retail market in general and in the current account and deposit markets in particular, as well as in mortgages and term lending; and it launched several new products during the year.  Permanent TSB has also made material progress in relation to managing its portfolio of mortgages in arrears. 

The strategy for Permanent TSB is to be an independent bank, competing within targeted segments of the retail banking market, and I will continue to support the board and management in the delivery of that strategy.

While I am strongly supportive of Permanent TSB in the delivery of their strategy I cannot discount the possibility that a strategic transaction could arise opportunistically at any time involving Permanent TSB which could be in the best interests of the State.  As part of their day-to-day role my officials will consider all credible proposals and develop strategic options relating to our banking investments. 

As I have stated previously in addition to the many initiatives the Government is undertaking relating to non-bank credit I would like to see more competition in the domestic banking system to provide the lending required for our growing economy and that as part of that process I would welcome the participation of foreign banks in Ireland, possibly by way of partnership with some of our domestic banks.

Separately a strategic review of NAMA is under way under section 227 of the NAMA Act 2009. As part of this review I am examining and will be discussing with NAMA a range of potential strategic alternatives to take advantage of current market conditions.  I intend to lay the report before the Houses of the Oireachtas before the summer recess.

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