Professor Philip Lane:

This is where I disagree with some of the comments made by the representatives who appeared before the committee in the last session. The evidence from the United States is that once cross-state banking was permitted there, banks became much more efficient and could be a cheaper provider of credit because of the diversification. A community bank which raises funding and lends locally has positives but also has the negative of exposure only to that region. If a region in Ireland is reliant on an industry that gets into trouble, the local bank will get into trouble because it is so concentrated in a locality. There are pros and cons in having these locally focused banks.

In the end I ultimately agree with my predecessor. We need a variety of banks. With consolidation in Europe, there will be some large banks which will be hyper-efficient because they will have the scale and technology to run the underlying systems cheaply and at the same perhaps supplement them - this is a public policy decision - with some more locally focused banks.