Lorraine Higgins (Labour) | Oireachtas source

I thank the Minister of State, Deputy John Perry, for taking this matter, which proposes that the Minister for Finance or Central Bank consider granting a new licence to a bank which will concentrate its lending in the farming community.

We all remember the Agricultural Credit Corporation, ACC, which was established by the Government in 1927 for the purpose of financing agricultural development. ACC subsequently developed into ACC Bank and expanded its services to include finance for small and medium-sized businesses. While it was in existence, the bank had loan agreements of up to €310 million with 2,900 farmers and had 1,500 farmers among its 5,000 deposit account customers, who saved up to €110 million. As is clear from these statistics, ACC Bank was instrumental in assisting farmers.

The decision by Rabobank in 2002 to purchase ACC Bank from the State sealed the latter's destiny and it was subsequently announced that ACC Bank would close in 2014. While Rabobank has given an assurance that ACC Bank will continue to hold its loans to the agriculture sector, a significant proportion of the bank's loans are in difficulty and have been outsourced to a collection agency. This development poses obvious threats to farmers and their livelihood and places family farms at risk of repossession. I am most concerned about this prospect.

Worse still, Danske Bank announced some months ago that it will close its branches in Ireland. This means Bank of Ireland and Allied Irish Banks will command 70% of the marketplace, a level of dominance by the two pillars of Irish banking that has not been seen since the 1980s. To further bolster this uneven situation, I understand €100 million from the European Investment Bank is being made available to AIB and its borrowers only. While these funds are welcome, it is most unfortunate that they are being concentrated in a single bank and competition is not being allowed to thrive in the Irish banking industry.

The creation of ACC Bank in the 1980s helped alleviate the problem with banking competition. We are on the verge of a similar problem and people are already suffering from its effects, including higher interest rates. Closing ACC Bank hurt our farmers and business owners. The current state of banking cries out for a new initiative, not only to provide finance to small and medium-sized businesses and farmers but also to become a competitive lever to force the major banks to improve their standards of customer service and financial products.

I propose that the Government consider buying back ACC Bank. If that is not possible in the current economic circumstances, it should explore other avenues, especially given the widespread public support for action in the banking industry. A Government initiative to take back ownership of ACC Bank or establish a similar bank would be welcomed on all fronts. The Government could use some of the resources of the strategic investment fund. This would be in keeping with the investment principles of the fund, which include the provision of commercial investment to support economic growth and jobs, investing in areas of strategic importance and recycling capital to enable continuous investment in new projects.

When the Agricultural Credit Corporation was formed its purpose was to finance agricultural development. The original objectives and culture of ACC Bank, when in State ownership, would still hold good today.