Wednesday, 3 February 2010
Dáil Éireann Debate
Minister for Finance (Deputy Brian Lenihan): As the Deputy may be aware, on 30 November last Anglo Irish Bank submitted its restructuring plan to the European Commission. This was a condition for State aid approval of the bank’s recapitalisation last year. In line with EU Commission guidelines, the restructuring plan considers all options for the future of the bank.
The submission of the plan marked the beginning of a detailed and comprehensive evaluation process in advance of any final decision by the Commission on the plan. This ongoing process requires extensive consultation and dialogue between the Commission, the Irish authorities and the bank.
However, as I have stated previously, I am committed to working closely with the Commission and the bank on the assessment of the plan to achieve the best possible outcome for the State from this process.
Minister for Finance (Deputy Brian Lenihan): As independent bodies, it is a matter in the first instance for the financial institutions themselves, subject to regulatory, competition and other relevant requirements, to discuss and agree their strategic arrangements. In that regard, there have been a number of recent developments. For example, Irish Life and Permanent has taken steps to form a new group holding company to allow it maintain maximum flexibility in the group’s corporate structure. In addition to this, the two building societies have commenced negotiations, which are ongoing, regarding a possible merger. It can be expected that other financial institutions, as independent commercial institutions, will also keep their strategic options under consideration in the context of a changing financial services market.
Regarding the State’s role, its primary consideration continues to be to protect, in the public interest, the financial and economic system of the State. The public support that has so far been provided to individual institutions and to the system as a whole has been provided to achieve that objective. Where capital support has been provided to individual institutions, it has been necessary to submit a restructuring plan for the relevant institution to the EU Commission. So far, submissions have been made for Anglo Irish Bank, Bank of Ireland and AIB. These plans are currently being considered by the Commission and, in due course, the outcome of that process will have to be taken on board by the financial institutions and the State. Depending on final decisions, such an outcome may have some implications for the structure of banking in Ireland. Therefore, pending this, it would not be helpful to be very prescriptive on the future structure of banking in Ireland at this point. However, on a general level, I would indicate that the desirable objective of a future banking system should be one that delivers competitive financial services in a sustainable manner and also one that, if feasible, contains a mix of ownership structures.
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