Dáil Éireann díospóireacht -
Tuesday, 12 Oct 1993

Vol. 434 No. 4

Ceisteanna—Questions. Oral Answers. - Third Banking Force.

Pat Rabbitte

Ceist:

30 Mr. Rabbitte asked the Minister for Finance if he will give details of the progress made with regard to implementation of the commitment in the Programme for Partnership Government 1993 to 1997 to develop a vigorous third banking force; the preparatory work, if any, that has been done; if a deadline has been set for the project; the meetings, if any, he has had with the parties likely to be involved; his views on the memorandum issued by the directors of the ACC opposing the plan; his views on whether it is appropriate that directors of State companies should lobby against Government policy; and if he will make a statement on the matter.

Michael McDowell

Ceist:

61 Mr. M. McDowell asked the Minister for Finance the contacts he, or through his request, other persons have had with banking institutions at home or abroad with regard to the proposed third banking force; and if he will make a statement on the matter.

Mr. B. Ahern

I propose to take Questions Nos. 30 and 61 together.

A thorough assessment has been conducted within my Department of the options open to the Government to give effect to the commitment to develop a third banking force. Deputies will appreciate that this is a complex issue and the consequences of the various possible scenarios have to be teased out comprehensively. It would be unwise to rush prematurely into an arrangement which might not maximise the benefit to the economy.

For this reason no deadline has been set for the implementation of the programme commitment. Deputies may nonetheless be assured that a decision will be taken by the Government as soon as it is prudent to do so.

I met with the board of ACC Bank and also, at their request, with representatives of Crédit Agricole. I also met, again at their request, with the chief executive of the National Irish Bank and the managing director of the National Australia Bank. I should make it clear to the House that at all of these meetings I made it clear that a decision on the future of the State banks is a matter for the Government, and that I would not give any commitment or assurance in relation to any hypothetical development.

I also met with representatives of the ATGWU, SIPTU and MSF, representing ACC staff interests. I will shortly be meeting an MSF union delegation representing ICC staff interests.

My officials met with the managements of the four State banking institutions named in the Programme for Government: ICC Bank, ACC Bank, the Trustee Savings Bank and An Post. Three of these bodies, ICC Bank, ACC Bank and An Post, also made formal submissions. My officials also met with representatives of Crédit Agricole and with the chief executive of the National Irish Bank, again at the request of the institutions concerned.

I understand that the management of the ACC subsequently circulated to their staff a summary of the document they submitted to me. I appreciate the concern of the bank to ensure that it develops in the most dynamic and productive way, and it is probably reasonable to observe that their reaction to the programme proposals has received an unusual level of publicity. The chairman of ACC Bank has assured me that the board and management of the bank are fully conscious that it is entirely a matter for the Government to decide on the future of ACC Bank, and that whatever decision the Government takes will have their full co-operation and support.

Mr. Rabbitte

The Minister has given us a long list of the people he met in connection with the pledge contained in the Programme for Government. Has he met any representatives of the commercial banks or been lobbied by anybody representing the commercial banks? Is he aware that, so far as the commercial banks are concerned, the notion of a third banking force is a dead duck? Can he confirm that the Labour Party programme managers are currently fighting a rearguard action to keep the idea alive?

Mr. B. Ahern

I have not met anyone from the commercial banks on this issue. Although I meet people from the commercial banks practically every day, I have not been lobbied by them. I do not know where Deputy Rabbitte got the notion that programme managers or anybody else are fighting a rearguard action.

Mr. Rabbitte

Is it not the case that the Department of Finance has decided that an end ought to be put to the notion of a third banking force, that that is the formal position of his Department and that it arises from direct discussions with and representations from the high street banks who are, effectively, operating a cartel? I believe most consumers would welcome the competition that would result from the emergence of a third banking force, not to mention the developmental role it might have in industrial development.

Mr. B. Ahern

I am not sure what view the commercial banks take of the idea of a third banking force. I suppose everyone fears competition but I am sure they would be concerned about the structure the Government might come up with. Some of the banks that the Deputy would consider to be high street banks would be very interested in the proposal in the Programme for Government. I have continue during the year to outline that to anyone who is seriously interested in putting forward views on how the proposal might best be implemented and on how we can best enhance competition, which is needed in the banking system. In the interests of improving the performance of the economy and preserving and creating employment I have listened to their views and will continue to do so. It is my job to bring a memorandum to Government in due course laying out the options and recommending what is best for the economy.

Mr. Yates

Will the Minister not come clean with his Labour Party colleagues? Will he stop playing ducks and drakes with them and tell them that this is a non-runner and should not have been included in the Programme for Government, that the ACC and the Trustee Savings Bank have said that they will not participate in a super State bank and that if any commercial rationale could be made for a third bank it need not be in the State sector but could involve one of the growing building societies or an international bank with a holding in Ireland and that there is no need for us to pursue this ideological agenda? Will the Minister not come clean and kindly but definitely drop the proposal?

Mr. B. Ahern

The proposal as outlined in the Programme for Government can be interpreted in many ways. The bottom line is to get a more competitive banking system. ACC has put forward proposals on how we can do that. Trustee Savings Bank has been more reluctant to do so. ICC has put forward proposals, as have other banking institutions both inside and outside the State. The Government will ultimately make a decision based on the options that come to the fore in the course of those discussions.

Mr. Broughan

It is crucial that the Minister recognises and says clearly today that there is no competition in the banking sector, for the reasons that Deputy Rabbitte has given. Would it be appropriate at this juncture to indicate clearly to ACC board members and staff that the project of a third banking force driven by a State initiative will go forward?

Mr. B. Ahern

I have informed ACC Bank that, while I understand their concern about the matter, the Government will ultimately make the decision, not ACC Bank.

Mr. Yates

Tell him straight. Let us drop it.

Mr. Cox

Will the Minister accept my congratulations on his Jesuit-like search for the fullness of meaning of the words in the programme for Government, and my further congratulations for making haste slowly on this matter?

Miss Quill

This is much like Lewis Carroll in Alice in Wonderland.

Mr. Rabbitte

I am glad to see Deputy Cox in a congratulatory mood. Is there a difficulty in understanding the commitment in the Programme for Government? Can I invite him to tell us what he, as Minister, thinks it means? Is he committed to the concept of the emergence of a third banking force?

Mr. B. Ahern

I am. I was one of the negotiators of the programme. I believe that the banking system in this State could well do with competition. That is a view held by some of the major banks and by some of the State banks and most of the business public in the country. How best to implement that is a matter for discussion. Deputy Rabbitte would know better than most that the reason the staff interests in ICC and ACC are against the proposal as outlined in the Programme for Government is that if just those two banks move together it could create massive redundancies.

Mr. Rabbitte

The staff at ICC are in favour of it. I have their submission here.

Mr. B. Ahern

They both agree that they would lose jobs. We have an obligation to listen to their point of view, but that will not stop the Government from making a decision in due course.