Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

A valid point is raised by the Senator in respect of the lack of competition in the Irish financial services industry, particularly in respect of the domestic economy. There is a danger of a duopoly being controlled by two banks. One approach is to get the economy growing and make it worthwhile for foreign banks to have offices here. The amendment I will table on Report Stage is to enable non-EU banks to open offices and branches here. We can discuss that on Report Stage when the Attorney General signs off on that amendment.

There is a wider issue. Consider how the US funds its economy. Approximately 75% is non-bank finance, whereas the situation is reversed in Ireland, in that it is nearly all bank-financed. When the banks are impaired or inhibited from lending, there is a liquidity problem in the economy. This is what is happening.

We are moving strongly to encourage non-bank lending. For example, before our EU Presidency commenced, we brought senior people from treasuries across Europe to Dublin and the Secretary General of my Department held a seminar on non-bank lending. This discussion was carried through to the informal Council in Dublin where the Commission tabled a Green Paper on non-bank lending. Arising from the discussion on the Green Paper, a pan-EU group with Ireland as its co-chair has been established.

In terms of practical help on the ground, the European Investment Bank, EIB, is far more involved in Ireland than it was and is providing greater amounts of funding. Since it was voted €10 billion in extra capital last year, it has the capacity to leverage that amount to provide a further €180 billion of lending across the Union. This is significant. The EIB will be a player in Ireland, particularly as a co-partner in public-private partnerships on infrastructure, school bundles, health centres, etc. This work has already commenced.

Smaller banks, such as the Silicon Valley Bank, are providing venture capital to small to medium-sized enterprises, SMEs, in Ireland. It has a fund of approximately $100 million. We are identifying other sources of non-traditional bank financing so that the economy can have the funds required to grow the new model economy that this country badly needs.

When the amendment is tabled on Report Stage, we can re-examine the issues that the Senator has raised.