Seanad debates
Tuesday, 23 October 2012
Adjournment Matters
Bank Branch Closures
6:45 pm
John Whelan (Labour)
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I thank the Minister of State for coming to the House. I am glad to see him here because I know he takes the matters we raise here seriously and will address them to the best of his ability. Where will I start with regard to AIB? It is in State ownership but not under State control because the same people are still running it in their own image and likeness and doing what they see fit with scant regard for the public interest or for the interest of their loyal and long-standing customers. The manner in which the bank is not dealing with mortgage arrears has been well rehearsed and I will not go into it this evening. It leaves much to be desired to say the least. Regardless of what the bank says, it is certainly not being supportive of small businesses or making credit available to them.
As the Minister of State is aware, to add insult to injury, we face the imminent closure of AIB branches in 56 towns around the country. This is a further blow to the self-employed and the small businesses in these communities.
I accept that the Minister of State, the Minister for Finance and the Government cannot micro-manage every decision and start running AIB. God knows, it has enough executives to do that. At the same time, we must bring some influence, common sense and reason to bear on the matter. One of the bank branches due for closure this week is in Portarlington, which has a population of 8,000 according to the current census. That could not be considered a small town by any stretch of the imagination, in fact, it is one of the fastest growing towns in the country.
I may appear to be coming to this issue very late in the day but it was not something with which I wanted to trouble the Department of Finance and the Minister of State. We tried to exhaust every possible avenue with AIB management at area, regional and national level with the director of regional banking. However, we were stonewalled at every attempt to even get AIB to consider deferring the decision until after Christmas. We asked AIB to consider postponing the decision so its socio-economic impact, the question of whether there were any viable alternatives and what arrangements AIB would put in place for their long-standing customers could be considered, without prejudice to the commercial nature of the decisions AIB was making with regard to the closures and rationalisation that may be required within its operations. Hundreds of businesses will not only be discommoded but put at serious risk.
AIB contends that An Post will make facilities available but there are serious limitations and restrictions on the amount of cash An Post can handle. I am not happy that sufficient alternative arrangements have been put in place by AIB with An Post and I do not believe An Post is capable of coping with the additional business. In many of the post offices about which we are talking, there are already queues out the door so I cannot understand how anyone is expected to do business there with their business account.
I will conclude with my primary question. I do not want to be alarmist or create problems that are not there but I believe the withdrawal by AIB of night safe facilities in Portarlington and forcing business customers to drive to towns like Port Laoise and Tullamore for cash transactions will pose a security risk for these businesses at a time when Garda resources in these towns are already stretched to their limits. I implore the Minister of Finance and Government to intervene even at this late juncture, for common sense to prevail and for the safety and security issues of this decision to be put into the melting pot as part of the process so some time is bought until these factors are considered.
6:55 pm
Brian Hayes (Dublin South West, Fine Gael)
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Could I put on the record of the House the official reply so that we might have an exchange of questions if it is of some use because I am well aware of this issue? I have already dealt with it in this House in connection with County Kerry and in the other House in connection with one or two other areas. I understand the Senator's frustration as a representative of the people given the dramatic announcements made by AIB in July of this year.
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 EU Commission, the European Central Bank and the IMF. A relationship framework has been specified that defines the nature of the relationship between the Minister for Finance and the bank, in this case AIB. 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 Senator will appreciate that it is an inevitable but unfortunate consequence of the necessary restructuring of the banking system - and return to viability of the sector - 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 bank is working very closely with its customers to ensure that the disruption is minimised and to provide a range of alternative banking options, such as use of local post offices and mobile banking facilities to affected customers.
As part of AIB's restructuring plan to return the bank to profitability and reduce dependence on State support, significant cost reductions are required over the coming years. In this regard, AIB announced its branch rationalisation programme in July 2012. 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 about 27% of AIB's branch network. It is worth noting that AIB will still have about 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 and, at the same time, 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, to pay bills and to order foreign exchange.
At the moment, AIB banking services are available in over 1,100 An Post outlets nationwide. The current services at any An Post outlet allow AIB customers to make cash lodgments for personal and business customers, avail of cash withdrawals up to ¤600 per day, pay their credit cards bills and use any of An Post's own branded 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 over 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 this new service in advance of the branch closure dates. As part of the closure process, the bank is also engaging extensively with customers, businesses and community groups in affected areas to ensure there is an adequate understanding about the rationalisation process and is endeavouring to keep all stakeholders fully informed to minimise any inconvenience. Clearly, it is not succeeding in that regard if what the Senator is telling me is the case, despite the paragraph I have just read to the House.
In respect of Portarlington, I am informed that customers of AIB are co-operating with An Post to ensure the provision of enhanced banking services at post offices in Monasterevin, Rathangan and Kildare. Furthermore, following the closure programme, there will be AIB branches within about 11 miles of Portarlington. On the issue of security, I understand that AIB have a dedicated SME cash management team available to meet with business customers and discuss their cash management requirements and the alternative services available including merchant terminals, CIT services and night safes.
I readily concede that it is not perfect but there is an inevitability surrounding the Government's decision to support the new pillar bank structure. Following our election to Government in March 2011, we said we would radically restructure the banks. An inevitable outcome of this requires that the banks become smaller, leaner and meaner in the sense of their operation and that they cut down radically on their cost basis. I am reliably informed that only one in ten transactions are now completed by customers in branches so the great majority of people are moving to online services. That is another inevitable development of the commercial banking system. It seems that despite the decision take in July 2012, AIB management clearly has a lot of work to do in persuading customers in these locations that the service that will be left either through An Post or elsewhere will meet the standard that is there.
As I said in my initial reply to the Senator, and I am sure he appreciates this, we are prohibited as a Government from directly intervening in the day-to-day management of the bank. It is strictly prohibited despite the fact that we on behalf of the people own the bank.
We cannot direct it to take steps in the manner that the Senator might suggest. Our task is to use persuasion in this House. If a better-configured service can emerge from these discussions, so be it. It is inevitable, however, that there will be branch closures when major restructuring exercises take place. I very much hope a much better job will be done by the bank in communicating this to its customers. There are customers who have been loyal for many years, and they did not get the banks into the trouble that required the State's bailout. The banks clearly need to up their game in that regard.
7:05 pm
John Whelan (Labour)
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I fully realise that the Minister of State's hands are tied and I know he would do his utmost to address this matter if he could. While Allied Irish Bank may be getting leaner, it is certainly getting meaner. Its lack of ability to engage with its customers in this case must be noted. I am baffled as to how it could be economically and commercially viable to close a bank branch in Portarlington, which has a population of 8,000. I assure the Minister of State that the alternative provisions the bank is saying it is making available nearby in Monasterevin and Kildare represent an appalling effort.
Many of the business owners in Portarlington, in particular, are considering moving their business and accounts en masse, lock, stock and barrel, to an alternative bank. I would not blame them for doing so. I hope the bank will at least have the courtesy to engage with its customers on the very serious security and safety issues associated with cash transfer the lack of night-safe facilities. Those concerned admit they will have to drive 20 km to AIB branches elsewhere. I hope this does not expose any businesspeople to a security risk or place additional strain on the local post offices. I thank the Minister of State for his concern and the decency of his reply.
Brian Hayes (Dublin South West, Fine Gael)
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The Senator is rightly using his time in this House to articulate the concerns of people in this area. He is also setting down a very strong marker for the bank in respect of what may occur following the rationalisation decision. He is fully within his rights to raise this matter publicly on the floor of this House. I would like to believe that, following this exchange, the bank will, at the very minimum, respond to the Senator on his clear reservations about its decision and set out in a concrete way the reasons it is closing the branch in question. I would like to believe it will meet the Senator not only to explain its position but also to assuage him regarding the concerns he has raised publicly.
We need a totally new banking culture in this country, not only in terms of lending decisions but also in terms of knowledge of local communities. Bank personnel ought to understand what represents a good or bad risk in their communities. We need a new culture of respect for and engagement with communities. I refer to the very communities that have been loyal supporters of the banks over many years and which did not put the banks into the appalling circumstances in which they now are and from which the State had to bail them out. I very much hope the senior management of the bank will respond to the Senator to assuage his concerns and set out in clear, concrete terms the rationale for its decision and the result of its cost-benefit analysis. If the bank cannot do so, it will lose business, as the Senator stated. This would be to the detriment of its interests, profitability and viability in the long run. I thank the Senator for raising this matter.