Vol. 552 No. 3
24 Mr. J. Mitchell asked the Minister for Finance if, in view of the major consequences for the Irish banking system and for customers of banks, he will indicate his policy on the postulated merger between the Bank of Ireland Group and the Allied Irish Bank Group; and if he will make a statement on the matter. [12506/02]
I have not received any proposals from AIB or Bank of Ireland, nor am I aware of any other relevant regulatory authority's having received any such proposals. Because of this the matter has not been put to the Government for consideration and the Government has not adopted a policy stance on what its response to such a proposal would be. The Government will address this issue in a thorough and comprehensive manner if it arises, with full regard to all relevant factors. If a merger includes a significant cross-border element, as would be the case in the event of a merger between AIB and Bank of Ireland, the European Commission must also be notified by the parties. The role of the Minister for Finance, as outlined in the Central Bank Act, 1989, is to take a considered view of the common good and this can only be done using the specifics of a case as presented. In this context, should such a proposal be made it will be objectively evaluated and approached with an open mind.
Deputy Mitchell may remain in his seat.
That is all right, a Cheann Comhairle. Is it not true that the Minister has been quoted in more than one newspaper as indicating that he would favour such a merger? Is it not also true that the Minister has at no time denied these reports? He should take advantage of this opportunity to do so.
I have not been asked this question directly before now but I have alluded to this matter on many occasions – long before there was any mention of the possibility of a merger by the chief executive of the Bank of Ireland, as he has been referred to recently. There are a number of hurdles that must be crossed before any such merger could take place. If the proposal includes a significant cross-border element the European Commission must be notified by the parties. The Commission will make the substantive decision, taking competition law into consideration, or refer the matter back to the national authorities. It is requested that the national authorities consult the Commission and it seems certain that any proposed merger of AIB and Bank of Ireland would be notified to the Commission.
Apart from this, the Minister for Enterprise, Trade and Employment must also be notified and take decisions on mergers. In practice she consults the Competition Authority. There is an exemption for banking business at present, but most large banks engage in a wide range of other activities, such as insurance, and a merger may be referred to the Competition Authority on such grounds. This exemption will shortly be removed under the recently passed Competition Act. The Minister for Finance must approve mergers which involve more than 20% of banking assets in the State, so a merger between Bank of Ireland and Allied Irish Banks would have to be judged by the Minister on the basis of his view of the common good. It is not legally clear if a Minister could block a merger on competition grounds if it had been approved by the commission.
The Minister has exceeded his time.
The Central Bank must make a decision, from the point of view of the orderly and proper regulation of banking, if an acquisition involves more than a 10% stake in the bank. There are many hurdles to be overcome before a merger can be approved. It is not in the Minister for Finance's remit to take it upon himself to make a referral. As I said in my initial reply, I am legally obliged to approach all cases with an open mind.
The Minister is using up time so he does not have to answer the question. Were newspapers briefed off the record to indicate that the Minister supports the idea of a merger between Allied Irish Banks and Bank Of Ireland?
Yes or no.
If newspapers were briefed, why has the Minister denied that they were?
Is the Minister in favour of a merger or not?
Can we have a "Yes" or a "No" answer to the question?
The answer to the question is quite clear.
Did the Minister brief the newspapers or did he not?
I know the Deputy has a broken ankle, but he should not break his other one by standing up so quickly, especially given that we are so close to an election. The law requires that this matter must be approached with an open mind.
What did the Minister do? He should answer the question.
The Minister should not be interrupted during priority questions.
I am interested in hearing the Minister's reply.
Deputy O'Keeffe was in the House when I set up a strategic review of banking, under which this question was examined. Officials from my Department and the Central Bank who carried out the review were generally sceptical of the advantages of a public policy promoting or facilitating the emergence of a single dominant domestic bank. It is legally required that certain procedures are undertaken. I would be failing in my duties as Minister for Finance if I did not approach the matter with an open mind. It is good that Mr. Soden has raised the possibility of a merger in the public domain. Many issues need to be considered, including the competition implications of such a move. I have said on many occasions that agreement to a merger depends on the circumstances of the time. While the relevant Minister will have to take account of the issues, he is merely a part of a wider process.
The Minister has failed to deny that he sanctioned the briefing of newspapers indicating his support for a merger.
I did not sanction such a briefing in relation to this matter. My views about the possibility of a merger have been known for some time and are on the record of the House from a time when Deputy Mitchell was a backbencher, long before the matter was raised by Mr. Soden.
I put it to the Minister that the Taoiseach and the Tánaiste have voiced their opposition to a merger between Bank of Ireland and Allied Irish Banks. The Fine Gael Party is totally opposed to such a merger. Public interest demands that the Minister for Finance should make his position clear. Does the Minister agree that the dominant position of a bank that would emerge from such a merger would leave us, in effect, without competition in the banking sector? One such major bank would be prone to a take-over, with much worse consequences for the consumer than the take-over of one of two competing banks. Does the Minister agree that every town in Ireland would lose bank branches and many thousands of jobs would be lost? Is it not incumbent on the Minister, in the dying days of his reign as Minister for Finance, to make clear his position?
I assure the Deputy that the matters he has raised will be considered in the event of a proposal to merge the banks, but no such merger has yet been proposed to the Government. The role of the Minister for Finance, under the Central Bank Act, 1989, is to consider proposals in the common good and to approach them with an open mind. No proposal of a merger in the banking sector has been put before the Government and no policy stance has been determined.
The Minister is the only member of the Government pushing this matter.
