Thursday, 12 December 1996
Dáil Éireann Debate
60. Mr. Callely asked the Minister for Finance the current situation regarding the promotion of a vigorous third banking force; the progress, if any, made to date in this regard; the difficulties or concerns, if any, which have been brought to his attention; if so, the person/body who brought such difficulties to his attention; the likely time schedule for a third banking force; and if he will make a statement on the matter. [24218/96]
Minister for Finance (Mr. Quinn): The prime objective of the concept of a third banking force was to generate greater competition within the retail banking market. In this respect, much progress has been made over the past few years in opening up this market, reducing barriers and creating greater competition generally. The strengthening of the Competition Authority in the Competition (Amendment) Act, 1996, and the creation of a director of competition enforcement were key developments in this regard. Moreover, the removal of statutory restrictions on the services provided by building societies, which are now emerging as important players in all sectors of the banking market, has resulted in major advances in the availability of services and improved access to those services. The Consumer Credit Act, 1995, has improved the level of transparency in relation to fees and the cost of credit. The recently published Central Bank Bill will bring the central clearing system, operated under the auspices of the Dublin Bankers Clearing Committee, under the supervision of the Central Bank and will confer powers on the bank in relation to the establishment, supervision, and operation of payments systems in the State. Finally, a Credit Union Bill, which is currently being drafted, will broaden the range of services which credit unions can offer, thus contributing further to competition in the market.
The State banking sector has also played a key role in the progress achieved to date. ACC Bank now provides the full range of services expected of a high street retail bank to all its customers. ICC Bank, which provides corporate financing to small and medium-sized enterprises, has developed a range of new and innovative products which specifically address the needs of its particular customers.
 As a result of these developments, there have been major changes in the marketplace, and in particular in the customer focus of the retail banks, since the original policy initiative was announced. Moreover, the situation in the retail banking sector is subject to continuing review to ensure that the provisions which have been put into place are having the desired effect. These provisions will be modified as and when the need arises to ensure that the objective of a competitive and vibrant banking market, delivering cost-effective services to all our people, is fully realised.
The dynamic and changing environment in the retail banking market has obviously had a major impact on our consideration of the future of the State banking sector. There are a number of options available, each of which would have varying impacts on competition, employment and the delivery of cost-effective, customer-based services. The question of protecting customers' interests and the interests of other stakeholders in State banks are key considerations. Discussions have taken place with the management and staff interests of all the institutions involved, each of which has raised its particular and legitimate concerns regarding the manner in which the Government might proceed on this issue.
When examining possible initiatives in relation to the State banks, the Government must take all these considerations into account, along with the unprecedented developments in technology and progress on economic and monetary union. This is a complex and difficult issue and getting it right is vital. While I do not have a specific timeframe in mind, I would hope soon to be in a position to bring forward proposals to the Government on it.
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