Pearse Doherty (Donegal, Sinn Fein) | Oireachtas source

I welcome the opportunity to have this timely debate on banking in this State, which is probably overdue. I have ten minutes and I hope to give some of that time to the Minister to respond. It is unfortunate that we are going through difficult times. I will focus on four issues, all of which have arisen in the past month and which have serious implications for the sector and for consumers, staff and banking policy. I am glad that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has taken up a number of my suggestions, including the issue of capital that our banks have to hold and asking the Central Bank to do a further assessment on the appropriateness of the current situation, but also a number of other issues at which we need to look.

My first concern relates to Ulster Bank and the announcement last month that it will exit the southern market. It is a hammer blow to staff, customers and the banking sector as a whole. Its exit will reduce competition and increase interest rates for consumers, or at least that is the likely direction of travel. The State plays a major role in banking due to its shareholding. In reality, we are regrettably seeing and feeling the aftershocks of the financial crash in 2008 because the reason Ulster Bank is withdrawing from the market is to free up capital that is trapped as a result of that crash. However, in dealing with the aftermath of Ulster Bank's decision, there is an opportunity to create a third force in banking to challenge the duopoly of AIB and Bank of Ireland. Permanent TSB is clearly the bank to take up that mantle. I ask the Minister to update us on his engagements with Permanent TSB and give us his view on its ability to acquire elements of Ulster Bank's loan book. The CEO's statement on "Morning Ireland" today that Permanent TSB is also interested in acquiring some of the branch network will be welcomed by many. Can the Minister update us on any of those discussions? Will he commit to the establishment of a forum on the future of banking, for which we have been calling for quite a while now? It would bring in all the shareholders and external experts to assess the state of our banking sector and the problems it faces and chart a path for its future.

The second issue I want to raise is the disgraceful decision by Bank of Ireland, in the teeth of this pandemic, to close 103 branches across the country. It intends to close 88 branches in the South and 15 in the North, which is more than a third of its branches nationwide. It is the wrong decision at the worst possible time. Bank of Ireland has told us that the services will be available through local An Post branches but the reality is that many of these branches, such as the one in Dungloe in my own constituency, offered a full suite of banking services that will not be offered in a post office. In Britain, the regulator called for banks to pause all branch closures during the pandemic on the grounds that it would hurt vulnerable customers who would be unable to prepare effectively for the transition to online banking, especially given that they cannot visit the branch during public health restrictions. Clearly, Bank of Ireland does not share those concerns. I acknowledge that the Minister cannot direct the bank or control it, but as the largest shareholder in Bank of Ireland, I appeal to him to call on it to reverse its decision, which was made in the middle of a pandemic, and halt it until there is proper consultation. I ask him to make that call today.

I turn to yesterday's announcement that AIB is to acquire 100% of Goodbody stockbrokers for €138 million. It sold it for €24 million and is buying it for €138 million. As the Minister knows, we have passed legislation in this House that subjects bankers' bonuses to a levy, which basically rules bonuses out within the system. The reason for that is that such bonuses contributed to the financial crash by incentivising risks and so on. That levy applies to all banks that were bailed out and, as the Minster knows, AIB was bailed out to the tune of just under €21 billion, with €10 billion of that capital still to be recovered. As the majority shareholder in AIB, with 71% of the shares, the Minister gave his consent to Goodbody to dodge the bankers' bonus levy. A number of AIB staff will transfer to Goodbody, all of whom will now be able to avail of bonuses and the levy will no longer apply. Why did the Minister give his consent to Goodbody to dodge the bankers' bonus levy, despite the fact that it is entirely owned by a bank that is subject to this levy, which is written into our tax law? How will this arrangement comply with that section of our tax law?

My final point relates to Davy stockbrokers. Yesterday the Central Bank fined Davy €4.13 million for a transaction by a number of its employees that breached the market rules for personal gain, which took place between 2014 and 2016. It brings a whole new meaning to the Davy slogan, "It's not just business, it's personal." Well, it was very personal for these 16 employees. Davy then proceeded to mislead the Central Bank in its investigation and it is reported that every member of the committee of senior executives at Davy who signed off on the transaction were members of the private consortium involved. No minutes were taken of this meeting and there was no consultation with compliance. It is also reported across a number of media sources that the current CEO of Davy and other senior executives were among those involved. The Taoiseach said in the Dáil today that yesterday's fine would impact on future behaviour. The Minister's own comments today noted the apology from Davy. Let me make this clear: none of that cuts it. It does not deal with the issue. It is a totally inadequate response that fails to deal with the seriousness of the issue at hand. Corporate fines will not hold a single individual to account. That is why the Central Bank has been calling for a senior executive accountability regime for over three years now. Yet, the legislation still has not been published by the Government. Yesterday's fine and the ongoing revelations underline the urgent need for this legislation but also the lack of priority it is being given by the Government. When will the legislation be published?

Davy's statement this afternoon was nothing more than an apology and it is clear that it has no intention of holding anybody within the organisation to account. Given the lack of individual accountability within that firm, it is clear to me that the NTMA is now left with no other option but to cut ties with Davy stockbrokers. The State cannot permit any entity or individual that puts personal gain above its regulatory requirements to have any involvement in our assets and liabilities. It is regrettable that it has come to this but it is unbelievable that Davy is still not holding its team, at the most senior level, accountable and that we have not seen any resignations. Instead we have an apology for not only frustrating the Central Bank's inquiry about what Davy did but also the breach of trust and regulations. What is the Minister's opinion on the continuing engagement between the NTMA, which holds our money, the taxpayer's money, and Davy, which is unwilling to hold its senior executives and staff accountable for what they have been found to be doing?

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