Paul Gavan (Sinn Fein) | Oireachtas source

I welcome the Minister. It is good to have this opportunity. It is timely to debate the state of banking in this State and it is certainly overdue.

I welcome that the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach has taken up a number of Deputy Pearse Doherty’s suggestions, including this issue of the level of capital that our banks have to hold, and is asking the Central Bank to carry out a further assessment on the appropriateness of the current situation.

As others have mentioned, we have had quite a devastating last 12 months, in particular in retail banking. The announcements by Ulster Bank and KBC have been hammer blows, not just to staff and customers, but to the banking sector as a whole and, in particular, rural Ireland. It is going to reduce competition and increase interest rates for consumers, or 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 of 2008. The reason Ulster Bank is withdrawing from the market is to free up capital 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. Does the Minister agree that we need a third force in banking, a point that has been echoed by others across the Chamber? If so, what steps is he going to take to enable that to happen?

One thing I want to emphasise to the Minister is the consistent call Sinn Féin has made in regard to establishing a forum on the future of banking. As the Minister knows, we have been calling for this for some time. It would bring together all of the stakeholders and external experts to assess the state of our banking sector and the problems it faces, and to chart a path for its future.If I am honest, I had hoped the Minister's speech would include a commitment to do that.

We cannot simply keep reacting. There has been a great deal to react to in the past 12 months. I would have thought it was an eminently sensible suggestion to pull together a forum on the future of banking. Every speaker has expressed concerns about the future of banking and how the sector should serve regional and rural communities in particular. Surely it is past time that the Minister committed to such a forum. I would be greatly disappointed if he does not give us a positive response. Either way, I appeal to him to clarify his position in that regard.

I call on the Minister to make a clear call on KBC Bank in particular to engage with the Financial Services Union - the union representing KBC Bank staff - on the difficult circumstances staff now face. There should be no difficulty with the Minister making that call and it is important we hear it.

It is worth listing the lenders that have left the Irish market since 2008. They include Bank of Scotland Ireland, Anglo-Irish Bank, which was no loss, Irish Nationwide Building Society and Ulster Bank. We have also seen devastating Bank of Ireland closures this year. The situation continues to shift rapidly. The Minister is clearly trying to manage the situation but it seems as if he is reacting constantly, and I mean that respectfully. A forum on the future of banking is a means for all of us to take stock and plan a more effective future for our banking in these challenging circumstances.

I raise the Bank of Ireland closures in particular. In the teeth of the pandemic the closure of 103 branches throughout the country was truly shocking. The bank intends to close 88 branches in the South and 15 in the North, which is more than one third of branches nationwide. There were seven closures throughout the county and city of Limerick at Abbeyfeale, Askeaton, Bruff, Caherdavin, Rathkeale and Roxborough as well as at the University of Limerick campus in September.

This has been devastating for Limerick and the mid-west. I had a long engagement with folk from Abbeyfeale. They spoke of how the town has a host of empty retail spaces. It was devastating to hear the news that one of the key anchors of the town will now leave. Again, that is why we need to see a co-ordinated response from the Minister, one that includes communities and vital stakeholders. That would ensure we can rebuild confidence in those areas.

Bank of Ireland made the wrong decision at the worst possible time. It has told us that services will be available through An Post branches. As the Minister knows, many of these branches offered a full suite of banking services and it is simply not possible to offer the full suite within the post office network.

Services continue to be taken from parts of regional Ireland when we need regional development. Without infrastructure and services like banking, it is difficult for jobs and opportunities to stay local. Economically, we are being dominated by the east coast and Dublin at the expense of parts of the west, including Limerick.

It is interesting to note that in Britain the regulator called for banks to pause all branch closures during the pandemic on the grounds that closures would hurt vulnerable customers who would be unable to prepare effectively for the transition to online banking, especially given that they cannot visit their branch during public health restrictions. Clearly, Bank of Ireland did not share those concerns.

I acknowledge, as did Senator Casey, that the Minister cannot direct or control the bank. As the largest shareholder in Bank of Ireland, I appeal to the Minister to call on the bank to reverse its decision. It was made in the middle of the pandemic and should be halted until there is proper consultation. I appeal to the Minister to make that call today.

My final point relates to public banking. It is noticeable that several Senators from different parties raised this matter. Sinn Féin previously published a document looking at how public banking could work in Ireland. The issue of public banking has been on the agenda for several years. The withdrawal of Ulster Bank from the Irish market and the closure of Bank of Ireland branches throughout the country highlight the urgency of examining the possibility of a new public banking model. I acknowledge that public banking was dismissed by the then Government following the Indecon report of 2019. The report found there was not a compelling case for the establishment of a State-owned public banking network because commercial banks were fulfilling the role. That is no longer the case; this is the point. There has been a fundamental change in the marketplace with the withdrawal of Ulster Bank and KBC Bank as well as the vast reduction in Bank of Ireland branches.

Senator Kyne raised a question earlier about the Indecon report. It is now out of date because the situation has changed drastically. I hope the Minister will recognise that and respond positively to the new situation. The credit unions and post offices have an important role to play. The failure to expand sufficiently the financial services provided by them has minimised their growth and profits. One cannot help but look at the credit unions and see the vast untapped potential that is still there. How can we get the money sitting in credit union accounts actively working for our communities? More can be done. This brings me back again to the future of banking forum for which we are calling. This is the opportunity the Minister should embrace to work out a more consolidated, sensible and inclusive pathway for banking in the future of this State.

The Government must engage with credit unions and post offices to explore the possibility of utilising their existing infrastructure for a new public banking system. The Kiwibank model, whereby banks and post offices share the same buildings, is an example of how existing infrastructure can be used for banking purposes. I am just out of time. I look forward to the Minister's response.