Paul Coghlan (Fine Gael)

I very much welcome the Minister of State. He has been very attentive to the House and, if I might be so bold as to say, perhaps this House stood him in good stead. I also thank him for what he said. He always manages to impart a message and he has done so with undoubted enthusiasm. I hope and sincerely trust that what he outlined will be followed through as a matter of urgency. He placed great stress on that. I support everything he said and sincerely hope there can be follow through because, in a sense, we are all in this together. The banking system is essential to the proper functioning of our economy. Without the stability of the banks, we would be lost and in a deep mire.

I was glad to note the Minister of State's remarks on Allied Irish Banks and the Bank of Ireland, in particular, and the strong competitive banking presence they provided heretofore in the marketplace. Sadly, faltering steps have been taken, as we know from recent history. The Minister of State also referred to the uncertain position of UK and foreign-owned banks.

The Minister of State said the Government would like a significant third player. The only issue I have about that is that some months ago, the Minister, Deputy Brian Lenihan, spoke about restructuring and, as I understood it at the time, from the point of view of the country's strength, he lead us to believe that he wanted to see the six covered institutions reduced to two or, at most, three. Perhaps the Minister of State will address what is envisaged by way of further restructuring.

On recapitalisation and sufficient liquidity, that is the key, with time, to the healing process which we require to restore confidence. This is all about instilling in the people confidence in the banking system because without that, we are lost.

The guarantee scheme was the most fundamental requirement. Without that scheme, we would have been totally lost. It has helped to bring a minimum level of stability. The only difficulty I see with the guarantee scheme, with which nearly all of us agreed, is that it is set to finish in 2010. It is vital that timeframe is extended. The Minister should indicate as early as possible that an extension will be provided as the guarantee is essential to maintain liquidity. In the context of interbank lending and bonds to the value of hundreds of millions of euro in Irish institutions, many of these are due to mature in the coming months. Normal practice would be that these would be issued for three years at a time. How, therefore, can they be reissued if there is no guarantee available beyond 2010?

I agree with what was intended to be provided by way of core tier 1 capital for both Allied Irish Banks and Bank of Ireland. However, I would like the banks to apologise to the public, as did their British counterparts before the Select Treasury Committee. There are many formulas for doing that here. That said, I compliment Allied Irish Banks on the public notice it issued in the newspapers some weeks ago. While it was not quite an apology, it acknowledged the commitment of taxpayers to the bank and set out the bank's commitment to work harder on behalf of the public. Hopefully, that will happen. Sufficient capital for our two major banks is vital.

The Minister of State spoke about the European Union. I agree we should stay in line with international best practice. I am delighted the president of the European Central Bank will visit Ireland tomorrow and that the Government is staying in close touch in that regard. We are fortunate to be part of the European Union and of the euro. This is a great strength to us in this difficult time. Hopefully, our membership will help make it easier for us to maintain ratios and raise the required level of funding on interbank markets. The Minister of State indicated that some new developments are expected and, hopefully, these will happen as quickly as possible.

I was glad to note what the Minister of State said with regard to the statutory code and that the banks will be required to demonstrate compliance, because lack of compliance is part of the reason for what has happened within our system. There was a lack of compliance, too cosy a relationship among bankers and a total breakdown of the Financial Services Regulatory Authority's ability to deal with the banks. Clearly, it was not fit for the purpose. I agree there should be an amalgamation of the Central Bank and the Financial Regulator.

The availability of working capital to small and medium-sized businesses is a matter of concern to all. We are just as concerned with regard to first-time purchasers seeking mortgages, which are not being provided in large numbers currently. However, I understand the Government is working with the banks to follow through on this and commit funds for people seeking mortgages. Long-term big business customers of the banks are pretty well all right, because the banks continue to deal with them and in the two major banks senior lenders are designated for that purpose. I would like to see more of this approach available to other customers. The Minister of State suggested this should be the approach in his speech and I welcome that. The bigger clients of the banks are having their loans rescheduled or rolled over and interest is being deferred. I do not say this should not happen, especially where these clients have a good record. Hopefully, the current difficulty for small enterprises is only temporary and we will get through it, even if it lasts for longer than first expected.

I welcome the action of the Office of the Director of Corporate Enforcement and have great faith in that office. In the past the Government left the office short of staff, but I hope it now has sufficient staff to deal with the business in hand. The office is constrained by law to deal only with company law and matters and will do that efficiently, no doubt, in Anglo Irish Bank. However, with regard to inter-transactions between Anglo Irish Bank and Irish Nationwide and Irish Life & Permanent, the law may not meet the requirements and may not allow it to go into the affairs of Irish Nationwide, which is a building society, or the other institution. Will the Minister of State address that issue in his response?