Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I thank the Deputy. On his first question, the part of the departmental budget in question has been used to publish papers, for example. One such paper, published in the past 12 months and available on the Department's website, is on the impact of risk-weighted capital levels on mortgage rates within Ireland. The fund is used to develop and publish research papers. They are available on the website of the Department of Finance.

On the practice that has led to the Ulster Bank exit and some of the comments made by Ulster Bank and NatWest, there is a combination of many factors, some of which the Deputy touched on. They relate to the scale of the Irish market and challenges banks are now facing in making a return in an environment in which interest rates are lower for longer. There are also factors that are specific to Ireland. We have made policy decisions that have been the right ones but they have consequences. For example, we require our banks to hold a higher level of capital in Ireland than is required in other markets. Having that higher level of capital has proved really valuable as our country has confronted the pandemic. It is a higher level of capital than other markets are asked to hold and it therefore influences how some of the banks have perceived maintaining a presence in Ireland. I emphasise, however, that we can see the value of the capital levels when we are dealing with an economic shock such as Covid-19.

On whether we have used the fund to research further the issue of having a public banking entity in Ireland, I do not believe we did so in 2020 but I definitely recall that, perhaps in the previous year, the Department of Rural and Community Development and I produced a joint paper on this that reached several conclusions, one of which expressed a view that I share, which is that if there is an interest in this particular matter among people who are not present in Ireland, the Department and I would be very happy to meet and engage with them. There appears to be a sense that we would be providing the capital for the initiative and that we would get it up and running. If there are investors who believe a public banking entity is a good idea, I would expect them to invest in setting it up. We have An Post and our credit unions. They provide a valuable service in this space already. A decade ago, we experienced the consequence of an overly tight relationship between the affairs of our State, the health of our country's balance sheet and our banking sector. We should debate whether that is a link we want to recreate given that we currently have a majority shareholding in two banks and a minority shareholding in the other that is still present in Ireland.

I have just been reminded that the paper to which I referred was published in 2019. It is entitled Evaluation of Concept of Community Banking in Ireland.