Patrick O'Donovan (Limerick, Fine Gael)
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I thank the Ceann Comhairle for selecting this matter for debate. As we have known for a while, Allied Irish Banks is going through a restructuring programme. For a while, it has flagged the fact that the programme would involve some branch closures. However, the number of branch closures announced on 27 July in a press statement, which was really about the fact that the bank was putting up its variable rates for mortgages, came as a major shock to very many communities. Sixty-seven branches and sub-offices are to close. The counties facing the largest number of closures are Donegal and Limerick. In my area, outside Limerick city, Glin, Foynes, Dromcolliher, Hospital, Doon and Croom are affected. For a number of years, Allied Irish Banks has serviced those communities, both through the old Munster and Leinster Bank and, more recently, under Allied Irish Banks plc. Throughout the bad days of the recent past, the customers in the communities, which are predominantly rural, have remained extremely loyal to Allied Irish Banks.

I understand from having spoken to the Department of Finance during the summer that the Minister is prohibited from getting involved in commercial day-to-day decisions. However, the Government and the Oireachtas in particular are obliged to represent the people who elected them, particularly in respect of decisions made by banks that are essentially being kept open courtesy of the taxpayer.

It has been stated that the closure of a bank branch will not make that much difference. On the day of the announcement, Allied Irish Banks referred to the banks in Stoneybatter and Capel Street, implying that one bank was around the corner from the other. In the area that I represent, a return journey to and from a bank in order to carry out commercial activities may be up to 40 miles. This is in the absence of night safes, automated teller machines and a commercial agreement between Allied Irish Banks and An Post, which has been flagged as the body to provide a banking facility in the future. I understand the Government's predicament and position on this matter but An Post is a semi-State company and Allied Irish Banks has still not concluded an agreement in respect of the individual communities affected.

We do not know whether the post office network will be logistically capable of providing banking facilities or whether postmasters, AIB staff or, most importantly, AIB customers have been negotiated with. As the Minister of State knows, carrying out any kind of commercial activity in rural communities, be it a shop or manufacturing business, is difficult. This includes pensioners who are constantly being told to lodge their payments directly into their banks. AIB is pulling out of tracts of rural Ireland without any regard to geographical impediments or the level of service remaining behind. Communities will be left picking up the pieces with their local post offices.

The manner in which the announcement was made left much to be desired. It did not say much. I was disappointed for local bank staff who were left to deal with the likes of myself and others in the communities. It was announced in the middle of the summer when the Dáil was in recess in the middle of a press release that focused primarily on a mortgage interest hike so that the national media would latch onto that issue and forget about the rural bank network.

Brian Hayes (Dublin South West, Fine Gael)
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As the Deputy will be aware and notwithstanding the fact that the State is a significant shareholder in AIB, the Government must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as per the memorandum on economic and financial policies agreed with the European Commission, the European Central Bank and the International Monetary Fund. The Deputy recognised this fact in the course of his contribution. A relationship framework has been specified that defines the nature of the relationship between the Minister for Finance and the bank. This framework stipulates that the Minister has no role in the commercial decisions of the bank, with these decisions remaining the responsibility of the board and management of the institution.

As the Government has stated previously, the Deputy will appreciate that it is an inevitable but unfortunate consequence of the necessary restructuring and return to viability of the banking system that branches in certain towns and villages across the country will be closed. The Government appreciates that the branch closures will have an impact on certain towns and villages, but the Department has been informed by AIB that the latter is working closely with its customers to ensure that the disruption is minimised and to provide a range of alternative banking options, such as the use of local post offices and mobile banking facilities, to affected customers.

As part of AIB's restructuring plan to return itself to profitability and reduce dependence on State support, significant cost reductions will be required in the coming years. In this regard, AIB announced its branch rationalisation programme in July of this year. The bank's branch overhaul will include a combination of six amalgamations, 16 full branch closures and 45 sub-office closures across the country. In total, 67 locations will be impacted, equating to approximately 27% of the bank's branch network. It is worth noting that AIB will still have approximately 200 branches in Ireland post rationalisation, coupled with an additional 80 EBS outlets.

Nevertheless, to mitigate the impact of the branch closures on customers, AIB intends to strengthen its long-standing relationship with An Post. It is also launching a new mobile bank service to provide certain banking services to customers in remote locations. The mobile service will allow customers to make lodgements and withdrawals, pay bills and order foreign currency.

Currently, AIB banking services are available in more than 1,100 An Post outlets nationwide. The current services at any An Post outlet allows personal and business AIB customers to make cash lodgements, avail of cash withdrawals of up to €600 per day, pay their credit cards bill and use any of An Post's own-brand services, including bill payments, postal drafts and foreign currency. In addition, AIB plans to build on this successful relationship with An Post and has arranged for additional banking facilities to be available in more than 90 selected outlets. AIB and An Post management are working closely together at local, regional and national level to ensure the successful launch of this enhanced service and An Post staff will be fully trained to offer the new service in advance of the branch closure dates.

As part of the closure process, the bank is engaging extensively with customers, businesses and community groups in affected areas to ensure an adequate understanding of the rationalisation process and is endeavouring to keep all stakeholders fully informed to minimise any inconvenience.

Patrick O'Donovan (Limerick, Fine Gael)
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I thank the Minister of State and appreciate his reply. Limerick has been disproportionately affected by this decision. No other county that AIB has left has a comparable geographical make-up. I must pay tribute to local management and staff, which have been engaging with people.

It is a pity that AIB did not consider the implications before making its announcement. There was no engagement with An Post at local level. To my knowledge, most of the post offices had not been visited by AIB prior to the announcement. The announcement was made without examining logistical tolerances or determining whether the decision would be manageable. The affected communities saw no engagement.

As the Minister of State knows, the region from Limerick to Listowel on the Shannon Estuary, an area that includes the country's largest deep water port, has been deprived of an AIB presence. South-west Limerick from Newcastle West to Mallow and the area from Doon to Tipperary are large regions with isolated communities and have been representative of loyal AIB customers, given the fact that AIB was the only bank with a presence therein. With the exception of Croom, the bank is not closing branches in any town where it must face competition. Both this decision and the manner in which the closures were announced were cynical. It is a pity that the bank is fixated on maintaining its timeframe without engaging with communities properly despite the fact that those communities remained loyal to it at a time when it was going to the wall.

The State is the bank's largest shareholder and I understand the commercial sensitivities and the fact that the Minister's hands are tied. However, it behoves the Oireachtas to tell AIB that its loyal customers and staff of many years were shabbily treated by the manner in which the announcement was made. Will the Department of Finance let the bank's chief executive officer know of the considerable dissatisfaction within political circles regarding how the bank has dealt with this matter? Were it not for the taxpayers keeping AIB and the other banks' doors open, we would not have a banking system. That AIB is closing the door and turning the key, in some cases after more than 100 years, says a great deal about the type of service it will provide loyal customers in future.

Brian Hayes (Dublin South West, Fine Gael)
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The Deputy made a number of valid points. Having raised the matter in public, it falls on AIB to reply to him directly, as it has responsibility for the rationalisation programme that has been announced. The Deputy expressed forcefully the local opinion of some of the decisions that have been taken. I understand that where it has been decided to close a branch or part of a branch, a branch in another location will take on that business. Given the fact that the Deputy has expressed in public his opinion that this has been done in a ham-fisted way, the AIB has a responsibility to reply.

I wish to raise two points. If there is to be a smaller banking system, it is inevitable that branches will be closed. Our banking system grew too large and, as I am sure Deputy O'Donovan agrees, relied on a dysfunctional model. Many of the people paying the price for that in the form of rationalisations are loyal customers and workers.

As I am sure the Deputy appreciates, the banking industry has changed dramatically. My understanding is that only one in ten customer transactions are completed over branch counters. The remaining 90% of transactions are conducted online or via mobile telephones.

I know AIB sub-office locations carry out an average of 20% of transactions carried out in AIB branches, so although it is not a major amount, I appreciate it is significant in the relevant areas. My understanding is that the bank now has 700,000 customers actively using Internet and telephone banking, with approximately 6.5 million log-ins per month. The banking industry has changed dramatically and it is inevitable in such circumstances that there will be rationalisation. How that is managed is a matter for the bank and I agree that the dialogue it has with customers, stakeholders and communities is absolutely crucial.

If something has happened that is untoward, it is in the first instance a matter for AIB management. If a more comprehensive reply can be given in terms of a better configuration of service in the counties where there is a specific need, it is a matter for the bank. If the Department is to indicate anything to the bank in public, it would be that the stakeholders must be understood in the configuration of a new service.

We are entering a totally new world with the banking system arising from the Government's actions regarding bank recapitalisation and the pillar bank structure. That requires a smaller banking system, and the Deputy is aware this was mentioned in our election manifesto. It is inevitable that events such as this will happen but they must be managed and done in a sensitive way. I agree with the Deputy in that the bank has a responsibility to those communities and the taxpayer to do this.