Vol. 455 No. 2
9 Mr. McCreevy asked the Minister for Finance the discussions, if any, he has had and the institutions and bodies with which he has consulted in view of his decision to bring firm proposals to Government on the third banking force; when he will bring proposals to Government; and if he will make a statement on the matter. [11937/95]
17 Mr. Sargent asked the Minister for Finance if he will consider a formal Government approach to the credit union movement to become a strategic partner for either of the two State-owned banks or for the Trustees Savings Bank in view of the fact that the credit union has over £200 million available to it in the form of its central agency agreement. [11439/95]
38 Mr. Andrews asked the Minister for Finance the views, if any, he has on the role of a State bank in the development of trade and in providing support for traders and exporters. [10735/95]
43 Mr. E. Byrne asked the Minister for Finance the proposals, if any, he has for the future of the An Post Savings Bank; and if he will make a statement on the matter. [11444/95]
91 Mr. Killeen asked the Minister for Finance his views on the role of a State bank in the development of trade and support for traders and exporters. [10859/95]
I propose to take Questions Nos. 9, 17, 38, 43 and 91 together.
In recent weeks I have circulated to Government Departments and the Central Bank draft proposals dealing with the options open to the Government as regards the future of the State banks, including TSB. I have met with a wide range of interested parties in connection with the preparation of these proposals. I have held meetings with representatives of the boards and staff of each of the three State banks, viz., ACC Bank, ICC Bank and TSB Bank. In addition to the representatives of the staff of each of the State banks, I received a delegation from the Irish Bank Officials' Association. I have also met with senior management of National Australia Bank, the chairman of National Irish Bank, and the chief executive of Ulster Bank.
I have not so far sought the advice of consultants in relation to any aspect of the future of the State banks. Deputies will be aware that my predecessor last year commissioned advice on several aspects of this question from independent consultants.
As regards the economic role of a State bank, one of the primary functions which I would wish to see any such institution play is, through competitive lending and support of enterprise, the encouragement of business and trade, which can only have a beneficial effect on economic activity and prosperity. ICC Bank in particular has made a significant contribution in this respect over the decades, both in relation to domestic trade and to exports. In recent years ACC Bank has quickly been moving into the funding of a diversified range of business customers on a substantial scale. In doing so both banks have operated to a fully commercial mandate.
My intention in seeking to develop the State banking sector to meet the needs of the economy is to foster greater competition in banking, both as regards costs and the availability of funds, notably in relation to small and medium-sized enterprises, and to contribute to greater business activity, with consequent benefits to the economy in terms of increasing prosperity and accelerating the decline in unemployment.
As part of my consideration of how best to restructure the State banking operations, I am considering how best An Post might be linked with whatever entity or entities may emerge from the evolution of this process. Until the Government has had the opportunity to consider my proposals, which I intend to put before it at the earliest feasible date, it would be premature to speculate on how matters may develop in this regard.
I have no plans to make an approach to the credit union movement in connection with the restructuring of the State banking sector.
One could accept a reasonable delay on the part of the new Government in reaching a decision on a third banking force. However, even the terminology of the Minister's reply has changed in the last few months. He said it would be premature to speculate on what date a proposal might be brought before the Government. Not long before this Government came to power, in reply to a question from me the Minister said this would be done shortly; he was asked again two months later and said it would be immediate; last month it was supposed to happen in this month, June; and now it is premature to speculate about it at all.
Does the Minister not agree it is time to make a decision on this matter, one way or the other? We have had enough speculation and all the information is there.
I thank the Minister for his reply which was only a recitation of the consultations he has had with the various bodies and what the modus operandi of those financial institutions should be. However, when will a decision be made to take us out of this limbo which does not help anybody? It damages the good name of the State in the international financial sector where Governments are expected to make decisions within a reasonable period. That reasonable period is long since over.
I must reject what the Deputy has said. To listen to him, one would think that the banks in question were not performing satisfactorily or that they were losing money, which is not the case. The two State-owned banks have been making profits for some time and the TSB, which is in a separate category of ownership, is performing profitably.
It is far more important that we get the best possible arrangement put in place than to move rather precipitously towards a particular kind of arrangement which may be speedily delivered but which may, in the long term, not suit the needs of all of the factors to which I have referred. Therefore, I do not consider that the time which we have already taken has been misspent or has in any way endangered the actual operation of the banks in question. That said, however, I share the Deputy's concern that it is essential that we move to finalise this as quickly as possible, and I have conveyed that view to my colleagues in Government.
Would the Minister not agree that one of the reasons for the present delay is the document put forward by one of his partners in Government, the Democratic Left, which, when it was thought that they were about to make a decision, gave the argument a whole new complexion? That was not helpful. Since the Minister has said that these financial institutions are performing well, one option open to him is to drop the whole idea and to leave matters as they are. I do not deny the Minister the right to make that decision. All of those institutions are working well and it is an option.
However, there is litle point in commissioning expensive Government reports, having various discussions with the boards of all these institutions and going merrily around without making a decision. It is time to make a decision and to finalise this matter because this delay is not helping the morale of those institutions. More importantly, the international financial institutions which are closely examining the situation are not impressed with the tardiness of the Government's response. I agree with the Minister that it is important to make the right decision——
The questioning is tending towards statements and is going on for far too long.
——but it is time to make some decision or perhaps just to leave matters as they are if that is the Minister's desire.
I think that the Deputy is saying that he would like me to make the decision but, more importantly, that he would like me to make the correct decision. I share that concern. The proposals which were on my desk when I came into the Department of Finance in January of this year did not find favour with me and it took some time to go carefully through the consideration that had been given by my predecessor in that respect. I do, however, recognise that it is in the best interests of all concerned to move as quickly as prudence would suggest or come forward with a proposal which will have widespread support and will have the desired effect. No doubt, the Deputy shares this concern.
