I welcome the opportunity to reply to this debate. I am glad to note the broad support for the Bill expressed by the great majority of speakers. While this is a short Bill there have been many speakers on both days. I thank those Deputies who contributed to the debate. I have taken note of the comments made and I regard them, by and large, as useful food for thought in the general process of preparing legislation on the banking sector.
Several Deputies referred to the future of ACC Bank and of the State banks in general. Any commentary by me on this matter at this time would be premature and would amount to speculation. Deputies are aware that on 10 October I received the report of the consultants whom I appointed to advise me on the available options in respect of the State banks in the context of Government policy for the banking sector, and in the light of a recommendation from the trustees of the Trustee Savings Bank which envisages the disposal of the State's interest in that bank. I am examining the report and expect to be in a position to put the matter before Government at an early date. As I indicated on two occasions in recent weeks, I cannot make any comment on the matter until the Government has had the opportunity to consider it in detail. For that reason I do not propose to comment on any of the general points made by Opposition speakers in relation to that issue, other than to reiterate that no bank is for sale nor has any decision been made as to whether any bank will be sold. Having said that, I would like to put on record my complete agreement with Deputy Yates that uncertainty can be damaging and that a prompt decision aimed at maximising the overall benefit to the economy, as several speakers have suggested, is therefore highly desirable. I will be impressing that fact on my colleagues in Government. I have no doubt that they will recognise that fact.
I would like to mention to Deputy Yates that the chairman of ACC Bank has assured me that he and his board will accept and act upon whatever decision the Government comes to as regards the future of the State banks. There is no ambiguity about this.
I want to reassure Deputy Rabbitte that major strategic decisions, in any area of policy, are not taken on the basis of budgetary opportunism. In relation to the future of the State banks, as in other areas, policy decisions are taken with a view to maximising the benefit to the national economy.
Deputy McDowell took issue with the very fact of ACC Bank being in State ownership. He put this in the context of his general view of the role of State enterprise. He should be able to take comfort from the fact that in reality, except on occasions like this when we have to interest ourselves in its affairs as legislators, ACC Bank is allowed run its own business at arm's length from any official intervention.
Whatever our views on this issue, the fact is that ACC Bank is in the public sector. The Minister for Finance is the 100 per cent shareholder. As such I must take the necessary steps to make sure that the bank's operations will not be impeded. That is why I am before the House with this Bill. Most Deputies will accept that this is a good reason.
Deputies McDowell and Rabbitte referred to Fóir Teoranta. There is, of course, no question of re-establishing Fóir Teoranta in another guise. That goes without saying. We learned our lesson during the 1980s when Fóir Teoranta built up huge bad debts, so much so that the Exchequer had to write off £75 million when the rump of the Fóir Teoranta portfolio was transferred to ICC Bank in 1990. We should not conclude that Fóir Teoranta did no good — far from it. The balance of advantage lay with winding it up. On Question Time some months ago I outlined the full facts and the difficulties for Fóir Teoranta.
Deputies Rabbitte and Hughes expressed widespread displeasure at the levels of bank charges. This area is outside the remit of this Bill, as mentioned by Deputy Connolly, but the Taoiseach and other Ministers, including myself, have met with the chairmen and chief executives of the major banks to discuss the various aspects of the relationship between the banks and their customers and how the banks can best contribute to the development of the economy. This initiative is ongoing. I avail of every opportunity at meetings with senior executives and chairmen of the banks to make the points which are made to us by large businesses and the Small Firms Association. This issue belongs for consideration on the Consumer Credit Bill but I have taken note of the points made and the views expressed. I will avail of every opportunity to make these points known to the individuals concerned in the banking fraternity.
There was also general support for increased competition in the banking sector. The desirability of competition goes without saying. I have already mentioned the importance I attach to it. This is a wider issue for another day, as is the question of the transparency of banking operations and accounting, which was raised by Deputy Higgins.
Deputy Higgins usefully called attention to the quarterly survey carried out by the Small Firms Association and published some weeks ago. ACC Bank came first in the survey's ranking of the cheapest banks for all business. The survey took a basket of typical facilities and standard charges applied to small business people. I welcome this endorsement of ACC's performance by an independent source.
Deputy Hughes applauded the £100 million small business expansion loan scheme which is being administered by the ICC Bank. He is correct in recognising the success of the scheme which is generating significant numbers of jobs by making subsidised credit available for eligible customers with viable projects. The leverage effect has been impressive and we are pleased with the way the scheme is proceeding. I noted Deputy Hughes's comments regarding the encouragement of an enterprise culture by tax initiatives. A total of 21 reliefs and other significant tax concessions for businesses generally were introduced in this year's Finance Bill. We also introduced concessions in the Finance Act, 1993. The recent urban renewal changes will greatly assist businesses and investors. The "living over the shop" scheme was announced recently and last Thursday the Minister for Enterprise and Employment and I launched a new scheme for enterprise areas in six locations throughout the country.
Deputies Kenny and Power raised the question of the bank's capital requirements. This is a significant issue for ACC Bank, as for any other. Capital is required by banks to enable them satisfy the capital adequacy requirements laid down by the Central Bank in accordance with EU requirements and the solvency ratio directives and, in general terms, to enable them increase their business. The capital required by ACC Bank to increase its balance sheet by the £400 million increment provided for in the Bill will depend on a number of factors, including profitability, market conditions, the dividend policy of the board and the composition of the balance sheet.
Deputy Burke correctly described ACC as a success story. I noted his comments regarding funding for the horticulture sector and its importance to many parts of the country, especially his constituency of Dublin North. Deputy Burke is of course aware that the ACC board is fully independent in its commercial decisions and I know he is not suggesting otherwise. Nonetheless, I recognise his genuine concern and I noted his points about adequate and ongoing funding for the horticulture sector.
Deputy Sheehan proposed raising the borrowing limit, not to £1.4 billion but to £2 billion or more. Not even the chairman of ACC Bank requested me to do that, but I welcome the Deputy's enthusiastic support for the bank. From the enthusiasm he showed for the bank last week, its staff must be taking good care of him. I take his point, but I cannot oblige him. As Minister for Finance I hold 100 per cent of the shares in ACC Bank on behalf of the people and this House is the fundamental representative institution of the people. I do not often hear suggestions that I should not assume accountability for the powers and rights I exercise on behalf of the people. All things being equal, a limit of £2 billion would take more years to reach than would be reasonable to keep ACC's affairs away from the scrutiny of this House. One of the functions of the Bill is to allow parliamentary scrutiny and debate on an institution such as the ACC bank which is 100 per cent owned by the people. I amended the limit some years ago and allowed Deputies an opportunity to express their views. On the two occasions I have presented an ACC Bill to the House those views have been positive. The changes proposed will allow ACC to move away from its sole concern with the agricultural sector. As Deputies may wish to air their views about this or other State companies in the future, it is appropriate that such matters be brought before the House.
Many Deputies referred to the question of dormant accounts and I appreciate that is a source of genuine anxiety. Earlier this year I undertook to establish the number and size of such accounts in the banking system — a complex exercise. There are obvious definitional and legal difficulties involved in such a process. I obtained data from the banks and building societies, but as yet I do not have a complete picture of the position. Accordingly, I sought further examination of accounts on the basis of new and broad criteria. When such data is to hand I will decide how best to proceed. I replied to parliamentary questions in that regard recently in the House.
Deputies remarked positively on the efficiency and profitability of ACC Bank. That is gratifying. It shows that a State shareholder need not be a bad thing. More fundamentally, it shows how positive management and a serious sense of purpose can turn around a business in difficulty and make it viable and profitable without much fuss, agitation or industrial relations or human resource difficulties. ACC used imagination and innovation to get substantial footholds in sectors outside its traditional base in farming and agribusiness. In opening new branches I met regional managers and the people who do business with the bank. As Deputy Killeen stated, I had the opportunity to carry out that function in Ennis last Friday. I have witnessed the standing of ACC in both urban and rural areas. The expansion of their business base is good news. The board, management and staff at all levels should be congratulated. While ACC Bank is a serious player in other sectors, it remains active and profitable in the agricultural sector. Its ethos of personal service and tailor-making schemes to individual needs has produced success and profitability. It deserves out congratulations and should be allowed get on with its business, which is the purpose of this Bill.
Deputy McDowell appears to hold the view that the Government is involved in the daily running of all State institutions. Other than making legislative or policy changes or assigning the £100 million portfolio of loans at reduced interest rates to ICC, the involvement of the Minister for Finance or other Minister in the daily affairs of such institutions is effectively nil. Issues such as staffing and the sanctioning of loans are decided on a commercial level. ACC Bank, although a State bank with 100 per cent of its shares held by me on behalf of the people, is a totally commercial bank which adopts similar criteria to those it would follow if owned by somebody else. While I welcome the acknowledgement of its success. I am concerned that people frequently believe there must be no State involvement if such ventures are to be a success. That is a slight on those who work in State companies.
Most Members, including Deputy Michael McDowell, made very clear their support of the bank. I am not too sure whether the concept of its being 50 per cent or 100 per cent one way or the other would make any difference. However, if it engaged in joint ventures or issues perhaps it could grow more but that is a matter for consideration at another time. Along with ACC and others I look forward to discussing these issues in the future.
Deputy Connolly asked whether it is true that the bulk of deposits with ACC are guaranteed by the State. In this respect it is worth pointing out that in the past couple of years the bank has been very successfully raising deposits without any guarantee cover, as was the case with ICC bank, demonstrating the credibility of those banks vis-à-vis the investing public.
I thank the Opposition spokespersons for agreeing to take all Stages of this very short Bill so that it can be discussed in the Seanad tomorrow.
