This document issued by the National Bank gives the reasons for the acquisition. In effect, they appear to suggest that this bank, which was carrying on one-third of its business——
National Bank Transfer Bill, 1966: Report and Final Stages.
Question proposed: "That the Bill be received for final consideration."
Might I interrupt the Deputy for a moment? On this Stage general remarks are not appropriate.
I think, with respect, the Chair rather misled the Deputy. What he wants to say should be said on the Fifth Stage.
That is what I wanted to point out to him.
Are there no amendments? I understood the Report Stage was coming up on Tuesday. The Minister said he would look at a couple of points. Now we have the Report Stage today. I do not know where I stand.
It was agreed we would have the Report Stage today.
The Minister indicated that he would look at a couple of points. We could have the result of his look now.
There are no amendments. I did have a look at a couple of the points raised on the last occasion. The first point was the necessity for the statutory provision for the transfer of accounts. Deputy Dillon raised a point concerning the transfer of property which was on bailment with the National Bank; Deputy Tully raised a point about pension rights, and another point raised was why a separate Irish company was necessary.
On the first point—the necessity for statutory provision for the transfer of accounts, which is provided for in section 2—in the absence of the section the transfer of customers' accounts would not be effective to enable customers to operate these accounts after the transfer date without individual customers in each case arranging with the National Bank of Ireland, the new company, for the opening of a new account. I think it is established and accepted that the National Bank are entitled in law to transfer accounts owing to it by its customers and the securities for these accounts, but the National Bank of Ireland would not be entitled to rely on these securities to cover future advances by this new bank. Therefore it would be necessary in such an event, without the enactment of this section, that all customers' accounts be ruled off on the transfer date. It would be further necessary for each customer to make individual arrangements as regards overdraft accommodation as from that date. The section is designed to prevent such a situation arising on the transfer date.
I think that in the case of transfer of property on bailment it is accepted that it is possible to transfer the bailment from one to the other. In any event, the section dealing with this, section 5, is designed to avoid disturbing the existing arrangement in relation to documents, goods and property deposited in the Irish branches of the National Bank for safe custody only. The National Bank of Ireland will in fact obtain custody of these documents and goods when it takes possession of the bank premises on the transfer date. The alternative to this would be that all these goods and documents would be returned to their owners on the transfer date and, if the owners desire——
Provided the owners were in a position to redeem them.
These are goods, for example, for safe keeping.
Sorry.
On the goods being returned to the owners, the owners then would have to arrange to deposit them individually, if they so wished, with the new bank, the National Bank of Ireland. As Deputies will appreciate, this would cause considerable inconvenience and great difficulties not only for the bank but, more particularly, for the persons whose property these goods and documents are. The section does not in any way take away from or interfere with the rights of these persons in relation to their documents and goods.
On the question of pension rights, there is a pension scheme operating between the National Bank and its employees. I think I need mention only one or two points of that scheme in order to illustrate the necessity for the proviso in this section which was raised in particular by Deputy Tully. A male official of the National Bank is entitled to retire on pension at the age of 65 or on completion of 45 years service or in the case of ill health. A male official who, after 15 years service, is called upon to retire for any cause except dishonesty or disobedience or some such action would be entitled to a pension. Otherwise, except in those instances, a male official is not entitled to a pension at the present time. The rights of female officials of the bank are similar in all respects except in the case of retirement on marriage when a female official is entitled to a gratuity.
The necessity for the section may be seen from this example : a person might claim that, on the cessor of existence of the National Bank, he was being dismissed for causes other than disobedience or misconduct and might therefore claim a pension. It is reasonable to assume that the same person will continue in service with the new company, the National Bank of Ireland, and would be in a position to claim a pension for service with the National Bank and to begin, with his new service, to earn pension rights with the National Bank of Ireland.
That is not the point. Suppose he is transferred to some out-of-the-way place and has to leave his house, or for any other reason. Suppose he does not want to continue service? Can he avail of pension rights then or does he forfeit the whole lot?
At the moment, if that man were being transferred and did not want to take the transfer then, unless he had his 45 years service, he would not be entitled to a pension if he decided to leave the service of the bank. As I said on the debate on the Second Stage of the Bill, the intention is to maintain in existence the old buildings of the National Bank within the Twenty-Six Counties and to maintain operations in them.
The road to hell is paved with good intentions.
If he had not 45 years service, he would be entitled to a gratuity, would he not? His term of service with the present National Bank as it now is would be taken into consideration?
Let us assume that he had 45 years service. He is automatically entitled to leave his employment and to take his pension.
He carries his service from one bank to the other.
He is in exactly the same condition of privilege with the new bank as he was with the old one.
Absolutely, yes.
Can the Minister give any indication as to how the existing pension funds will be divided between the staff that are staying with the National Bank in England and the staff in Ireland? There could be some variation in the division of that fund.
It is a non-contributory fund. There is no actual fund there.
I understand it is a superannuation fund.
The pension scheme is non-contributory. Therefore, I take it that any entitlement to pension or any proceeds to offset pension will come from the ordinary revenue of the bank.
Would people who are on pension have to have their rights guaranteed? I assume that would be so.
These rights would be continued.
I do not quite see where the guarantee is in section 6.
Take a person enjoying a pension as of now, or who will, at the time of the transfer, become entitled to a pension. If there is the slightest danger that anything will be done prejudicial to the continuance——
The company paying the pension no longer exists in this country.
After all, we are dealing with the Bank of Ireland which is the oldest banking institution in the country. This will be a subsidiary.
Surely this Bill is not for the purpose of benefit to the Bank of Ireland but of benefit to the employees of the National Bank itself and the National Bank of Ireland?
It will be a subsidiary of the Bank of Ireland.
Will it have a separate entity or, in the final analysis, will they have to ask the Bank of Ireland for everything?
A separate entity.
Therefore, this new bank is liable to pay, not the Bank of Ireland.
That is the effect of lines 9 and 10 on page 4. The Minister said there is no pension fund. It says here in the section "... become a member of the National Bank of Ireland men's pension fund or the National Bank of Ireland women's pension fund".
There are actually no contributions to a pension fund.
But there is a fund there?
Obviously, there must be.
I think there is a fund into which the bank has been paying contributions every year. How will that fund be divided between the English entity that remains and the Irish entity?
Even though it is a fund, it is probably just simply an asset.
I think so, too. There is a question of splitting it.
It is a fund that is paid in regularly on behalf of each official, although they do not personally contribute to it. I take it that this fund is accumulated as an entity of the bank which now exists. This Bill is to divide this bank into two sections. I think Deputy Sweetman's query is very sound—what is the measure of the division; how much money is retained in this fund in the continuing National Bank and the Bank of Scotland; how much will come to the Irish half?
As the Deputy is aware, every pension fund evolves as a result of very close actuarial study, whether it is contributory or non-contributory. Therefore, I do not see that there will be any difficulty in pursuance of that kind of study in apportioning the fund as between officers of the branches in England and Wales and officers of the bank's premises in Ireland.
The odd part of it is that there is nothing in the balance sheet showing such a fund. That is why I cannot understand it.
That is why I said it was a simple asset, that there is no fund in existence at all.
Why do we use the word "fund" in the Bill?
There may be a fund set up in the National Bank of Ireland.
The word pension "fund" is probably synonymous with pension "scheme".
It is not usually because I have occasionally in another capacity dealt with the drafting of pension schemes and one of the things always done at the very beginning is to define the fund. That is why I am puzzled.
Is there no place where there is shown the actual amount of such fund? Surely it is an asset? Surely there is a statement within the accounts of the bank? It must be written somewhere.
I am sure it is available somewhere.
I have the balance sheet in front of me and cannot find it.
It may be administered as a local authority would administer it, out of the general fund, and not treated as a separate fund. That appears to be the way in which they are dealing with it.
I will get some clarification on that between now and the Seanad. I may have to come back to the Dáil, if necessary.
Will the Minister clarify beyond question that all employees will have their rights secured— that is all we are interested in—that if there is to be any division between the English section and the Irish section there is some way of ensuring that the Irish section would get its fair share?
Yes, and there is specific provision for it in the agreement. With the permission of the House, I will read it out:
With a view to implementing the foregoing the Vendor Bank and the Purchaser Bank shall so far as is within their power procure the establishment of a Pension Scheme or Pension Trust Funds in relation to the officers clerks and servants referred to in paragraph (b) hereof and also in relation to the pensions referred to in paragraph (a) hereof and the transfer to the Purchaser Bank hereof of the appropriate part or parts of the several pension or superannuation funds now existing in relation to the officers, clerks and servants of the Vendor Bank.
If the Minister does not mind my saying so, I think the drafting of that is a little better than the Bill because that uses the word pension "scheme" and the Minister uses pension "fund" in the Bill. If he followed that precedent he would have a better section.
Strangely enough, the draftmanship was mainly in the hands of the legal advisers to the parties to the agreement.
Mr. P. Hogan (South Tipperary) rose.
Does the Deputy wish to refer to this specific point of the pension scheme because we cannot have a general debate on the Report Stage?
(South Tipperary): Could I make one statement on Report Stage?
By the way, I misled the Minister when I said there was nothing in the balance sheet: Note 3— the bank has guaranteed the solvency of the staff pension fund. Therefore, there is a fund.
That is worse again.
Which bank?
The National Bank —the existing bank.
When it goes out of existence, who guarantees it after that?
It is page 7. The Minister has the same thing as I have here—Note 3.
Deputy Hogan is entitled to make a point arising out of Committee amendments but beyond that he would not be in order. It may be in order on the Fifth Stage.
(South Tipperary): There are no amendments now before the House and everybody is talking.
Deputies are asking questions. They were entitled to ask these questions. They arose out of Committee proceedings.
The Minister is trying to find the answer to my question.
Cannot he answer it on the Fifth Stage just as well?
I am perfectly agreeable to anything.
I have here copies of two interim Trust Deeds both dated 2nd February, 1966, between the National Bank of Ireland Limited and certain named persons who are at present, I think, directors of the National Bank. I may as well read them out: Arthur Gerrard Quirke, William Patrick O'Loghlen, Joseph Theodore Daniel and Gervase Christopher Gerrard Neville.
These are not directors of the bank. One is; the rest are not. I think the Minister will find that these are the trustees of the existing pension fund.
Yes: "Hereinafter called 'the Trustees' ".
We are not doing badly even though we have not the deeds the Minister has.
I did not expect all these minute points to be raised.
They are not minute for anybody who is entitled to a pension scheme.
I do not think there is any question whatever of anybody being disentitled to a pension.
Provided that in the division between Ireland and England the division is carried out actuarially.
Under that deed, the bank, being the National Bank of Ireland,
has determined to establish a Superannuation Fund to be known as the National Bank of Ireland Women's Pensions Fund (hereinafter called "the Fund") for securing pensions on retiring at a specified age and other benefits for present and future female employees of the National Bank who immediately prior to ceasing to be in the service of the National Bank were employed in the Republic of Ireland or Northern Ireland and are currently enjoying pensions payable under the National Bank Women's Pensions Fund (hereinafter called "Female Employees on Pension").
And there is a similar provision in regard to the men.
Yes. It is exactly the same except that the word "male" appears instead of "female".
On Committee Stage the Minister was also asked if he would give a little more clarification with regard to the reason for these proposals. Perhaps the Minister would give us a little more information as to the reason for dividing the National Bank?
That would be more appropriate on the Fifth Stage.
No, Sir, this was discussed on Committee Stage.
It does not arise out of Committee amendments.
If I get up on the Fifth Stage, I have no gaurantee that the Minister will answer.
The Chair has given a good deal of latitude.
(South Tipperary): There was a good deal of scarcity of information on the entire business.
That is a point for the Fifth Stage.
Will we have any guarantee that we will get an answer?
If I might answer that question, I understand that Deputy Esmonde asked——
I would prefer that the Report Stage be concluded and that we go on to the Fifth Stage.
Question put and agreed to.
FIFTH STAGE.
Question proposed: "That the Bill do now pass."
I want to ask the Minister have I completely misunderstood this Bill or have I not? It seems to me that the Bill does nothing except make it cheaper and easier for a decision of the shareholders in the company to be carried through if the shareholders so decide. I think the meeting is today. Supposing the shareholders decide today that they want to carry this division into effect, then it seems to me that everything that this Bill does could be done by the two different companies, the old and the new, but at enormous expense both to the company and, much more so, to the customers. The Bill itself, as I understand it, does not take away the rights of anybody, rights that could be cumbersomely taken away under the existing law, but I think a great deal of the misunderstanding in relation to the Bill—I am talking now of outside this House—arises from the fact that there is this belief that the Bill is taking away rights that could not otherwise be taken away. As I understand it, the Bill provides solely a ready and easy method of doing something which the two companies concerned could otherwise do at enormous inconvenience to every person concerned in any way and at the very greatest cost. The cost, for example, to mention one small matter, of ensuring transfer in the Land Registry of every single charge from the National Bank to the National Bank of Ireland, would be fantastic.
And the time. Nobody would ever live to see the end of it.
The cost would be fantastic and it would be chargeable to the customers and not to the banks. Apart from that, the Land Registry are in such a mess already, because of the Government's failure to give them the proper facilities, we would never get anything of any sort again out of the Land Registry. The works are badly gummed up there and this would put the kibosh on them altogether. However, it is quite legal to do it the other way and all the Minister is doing in this Bill in that respect is to provide a cheaper and speedier way of doing it, arriving at the same result at the end.
By accepting this Bill the House is not passing any judgment on whether the price paid for the shares is a just, an adequate or a fair price. It is not passing any judgment as to whether the directors concerned were wise in the manner of presentation—wise, for example, in the National Bank not providing quite the same technical advice guarantees as were provided otherwise. The House is not passing judgment on whether the price is too low or too high. All that will happen is, if the parties themselves decide, this Bill will cut down the cost of doing the job.
I am a little concerned about the pension fund which we discussed on an earlier stage and I should like the Minister to clarify the position beyond question between now and the time at which the Bill will come before the Seanad, making it publicly clear, so to speak, in the Seanad why there are references to these funds, if there are no funds, and exactly where the difference lies between a fund and a scheme, and exactly what will happen. It is undoubted that all the pensions of the employees in England and here have been and are being at present paid apparently out of the same kitty, whether that is a specially earmarked fund or the general funds of the bank. I want to ensure that these people will be paid in a similar way in future and that all the rights that are there will be duly and adequately preserved when this Bill goes through, if it does go through.
I do not think we need comment here on whether or not there are good or adequate reasons for the Bill, but there is one thing we should bear in mind. I do not think it would be to the national advantage to have too much rationalisation of the banking system. People often say, when there are two branch banks in a small country town, that there is not enough business for both. Quite apart from the element of competition, the personal element is tremendously important and, if rationalisation is to mean fewer branch banks in country towns than at present, that will put the managers of the banks who are left in a position in which I do not think anybody would like to see them. The personal relationship between the customer and the manager can, through no fault of either, often go wrong and an aspect will be introduced into banking that should not be in it. Perhaps that is not strictly relevant, but I mention it from the point of view of throwing out a very strong caveat against further mergers.
It would not be desirable, I think quite honestly, that this particular group should extend further. The slice now held by the four associates, the parent itself and the three subsidiaries, is a large enough slice for any one organisation to have. Though the subsidiary bodies will to some extent be competing against one another, it is nevertheless the one organisation and if it went further than is visualised under the present scheme it would, in my opinion, go much too far on the road to monopoly. While it may be that others may join together to compete with this large group, that is a different story. That could have sound results but, so far as this group is concerned, I think it would be dangerous for it to extend any further.
I trust those concerned will see the dangers that would arise from the creation of such a monopoly. When they are engaged, as they must be engaged, and as they should be engaged, in the consideration of what rationalisation of services can be provided, I hope they will remember in particular the personal element in the country as between the customer and the bank manager, which may become a very difficult relationship if it so happens there is only one bank in an area. If the customer falls foul of the bank manager, he will have to do his banking business in another town. That will be neither satisfactory nor desirable from the point of view of the national interest, apart altogether from the personal, individual interest.
The Minister clarified the position about the superannuation fund and I am satisfied that that matter has been dealt with. Secondly, on the question of the valuation account, the Minister explained the other night that he was not quite clear and, when he had finished, I was not quite clear what the situation was. It does appear that the stamp duty paid on transfer has to be paid on a very much smaller sum than the actual value of the bank buildings.
Deputy J.A. Costello and Deputy Esmonde made the point that I was suggesting that the shareholders of the National Bank were being asked to pay on a much greater amount than was actually the case. Of course, the direct opposite is the case because it would be the shareholders of the new bank that would be paying not the shareholders of the bank who are selling. The final point is this: is the Minister satisfied that the shareholders of the existing National Bank are being treated fairly on the valuation of the buildings in view of the fact that property which should be worth anything up to £10 million is being transferred at a value, according to their own balance sheet of £2,980,000? Does that not mean that the shareholders of the new bank are being given possession of a property for one-fourth or one-fifth of its actual value? Is the Minister satisfied that that is not the position?
Debate adjourned.