Michael Noonan (Limerick East, Fine Gael)

Credibility is at the heart of this amendment and it is at the heart of this debate also. It is hard to get credibility for a strategy if those of us who are making the decision do not have the fullest information. The Minister is in effect asking us to make a decision about the nationalisation of Anglo Irish Bank without providing us with any information to enable us to make such a decision. Quite frankly, I do not know whether it is a good proposal or a bad one because I do not have enough information on which to measure it. I do not want to personalise the debate. I think the Minister is a truthful person, but that is not the issue. The issue in the markets is whether people believe him. Truthfulness is not the issue either with the Central Bank, the regulator or the Government — it is whether the Minister is believed. If the markets say that this blue carpet is pink, one will have to prove the opposite or they will operate on the basis that it is pink. That is the trap the Administration is falling into now. Deputy Barrett went through some of the reasons for this. As late as last September, the governor of the Cental Bank and the regulator's office addressed committees of this House assuring them that everything in the banking system was fine. They said they had stress tested the loan book and there was no cause for concern. They said that Ireland was different from the United States in that there were no bad banks here and no bad mortgages. They said the banks were able to cover any bad debts we had, they were sufficiently capitalised and everything was fine. Then there were a series of statements by various Ministers, including the Minister for Finance, indicating a strategy for a guarantee on the banks. There was an absolute debacle when we discovered what Mr. FitzPatrick was up to and how the regulator's office mishandled it. It had the information about it since last January but did nothing. Is it any wonder therefore that there is a lack of credibility?

Just before Christmas, the Government said it was not nationalising Anglo Irish Bank. The Minister has told us today that he was preparing the legislation back in September and that one of the options at that time was to guarantee four banks and maybe nationalise Anglo Irish. Then he decided that the guarantee was sufficient. Before Christmas he was talking about recapitalising the bank. He mentioned the figure of €1.5 billion, yet now he is nationalising it. It does not give any sense of credibility when the policy keeps changing with events. I am worried about the country at the moment and I do not think I am alone in that. It is going to be difficult to restore the economy to viability and get people back to work. It will be difficult for the Government to bring in the necessary fiscal correction. However, nothing of a viable, long-lasting nature can be done unless the banking system is put right. Unless we have a credible banking system it will be impossible to rebuild this country's economy and restore employment.

The problem is that the Minister has not put enough information on the table to give credibility to today's process. The PwC report must have a lot of the information the House requires but the Minister says that for reasons of commercial sensitivity he cannot publish it. In his speech the Minister said the Jones Lang LaSalle report supports the PwC findings, but he cannot tell us anything about what is in that either.

Anglo Irish Bank must have a draft annual report for 2008 with a full balance sheet. I understand it was to be published in about two weeks time. I also understand that publication of the annual report has been deferred. The benign interpretation is that it is being deferred so that more, and fuller, information can be put into the annual report. When the Minister replies to this section, I would like him to give us a guarantee that with the changing status of Anglo Irish Bank, the nationalised bank will still proceed to publish the annual report, that the full balance sheet will be available and that the auditors' comments on the balance sheet will also be made public. There should be no holding back on the information or on the bank's intention to provide extra information above what it would normally put in an annual report.

It is a pity that this debate came before the publication of the annual report. If we had that report, together with a full balance sheet, a certain amount of our questions could have been answered. However, we might get some insight into the loan book at that stage. What is going on in the markets this evening, as yesterday, where the main bank shares are being written down again, arises from the same credibility problem. Bank of Ireland and AIB are good banks with a proud tradition in this country. They are certainly not fly-by-night people and they have been prudent in their banking. They are sound but the Minister must convince the international markets of this. He has been unfortunate this week but he restated his position on recapitalising the banks earlier. That will not run. The problem faced by the Minister and the Government all the time is that they are behind the curve on the debate. Things move and they are left behind.

I will outline what is wrong with what the Minister said. He stated he will proceed with recapitalisation, as intended before Christmas, and put €2 billion each into AIB and Bank of Ireland. However, because they were not able to raise funds on the markets, particularly in north America, the Minister intends putting another €1 billion into each of them. It is unfortunate that the announcement regarding Anglo Irish Bank was made while AIB representatives were engaged in a roadshow in the US, as they failed to come up with €1 billion from the private sector because of this coincidence. It is also coincidental that the British authorities yesterday decided that the 12% return on the preference shares they were putting into their banks was too onerous. It was affecting their liquidity and they were unable to fund business in the UK and, as a consequence, they are switching from preference shares to ordinary shares. The essential difference is ordinary shares proffer ownership whereas preference shares do not.

The market is taking a view on the Minister's statement that he will also be forced to take ordinary shares instead of preference shares in his recapitalisation programme. If the Minister gives the €3 billion he has announced to each bank, he will own approximately half of each bank. Whether one calls that nationalisation or not, as soon as he owns approximately half of each bank, the value of shares held by existing shareholders will be diluted by 50%. Is it any surprise the value of Irish bank shares fell by 50% yesterday? Their value was diluted because the market is taking a view that the Minister will have to go down the ordinary share rather than preference share route and, as a consequence, he will own approximately 50% of these banks, slightly more in the case of one and slightly less in the case of the other. Share values have reduced as a result.

Since share values are so low in the banks, they do not matter a great deal in the debate currently. If a share in one of the major banks falls from 60 cent to 30 cent, a shareholder who bought when the shares were valued at between €17 and €23 will lose his or her money anyway. It might be a 50% drop from 60 cent to 30 cent but it is a 100% increase when the reverse occurs. However, that does not matter. The fellows on floor eight trading in the bond market matter more than the fellows trading on the ground floor in New York. They are deciding whether to invest €400 million in bonds in AIB or Bank of Ireland and they are taking a view on the banks because of the perception that has been created. The Minister's earlier statement accentuates that problem and he needs to bring his thinking up to date. Anglo Irish Bank is the third bank in the State. There would be a great deal of grief if the bank went under but it is not fundamental to the Irish banking system. However, if anything happened to the main clearing banks, one would not be able to cash a cheque and there would be serious grief. We must get real about this.

A significant element of the problem with the banks, the Government, the Central Bank and the regulator is the withholding of information. If the information was made available, at least there would be a sense of reality and people could measure what is happening. If these are sound banks anyway, as I believe, it is in everybody's interest that the fullest information be made available in order that a false crisis is not created and we will not have to return to the House in a few weeks to take more serious action regarding the main banks.

I agree with many of the comments regarding the behaviour of the former chairman of Anglo Irish Bank. If one walked down St. Stephen's Green tonight and threw a brick through the window of the bank, one would probably be jailed but the chairman could transfer money in and out and present the balance sheet in a way that disguised the real position while people bought and sold shares on that basis. That has to be fraud. On the day he resigned, the then chairman made a self-serving statement in which he said nothing illegal had occurred and by midday this was echoed by the Minister's colleague, the Minster for Social and Family Affairs on "The One O'Clock News". Anyone with a sense of right and wrong knows that while a section in company law might not specifically state if one rigs a balance sheet, it is an illegal act, the wider issue is a fraud and questions arise under common law. It has to be a criminal offence, which must be scrutinised. Whether that is done through this amendment or otherwise, it must be investigated.

I would like the Minister to comment, in particular, on the annual report and to give a commitment that it will be published in due course in the fullest possible way. Will he also make a commitment to try to get ahead of the debate and ahead of the game and announce a banking strategy that applies to all banks? He is playing catch up but he is falling further behind. It is a serious situation.

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