Joe Costello (Dublin Central, Labour)
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Question 61: To ask the Minister for Finance if his attention has been drawn to the recent record profits reported by the main banking organisations; his views on whether there is excessive profit taking in the banks; his further views on whether the banks are making an appropriate contribution to the Exchequer; his plans to seek a greater contribution from this sector; and if he will make a statement on the matter. [12374/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The financial services sector is a major employer in the Irish economy, employing over 55,000 people both directly and indirectly and making a significant contribution to GNP overall. It supports activity in other economic sectors, contributes substantial tax to the Exchequer and forms an essential part of our economic infrastructure. Strong opportunities exist to grow and develop Ireland's financial services sector. The prospects for the banking sector are positive, with the potential for the sector to provide an increased number of skilled and well-paid jobs for our comparatively young population in line with our future employment needs.

I am aware of the recent bank profit announcements and I am satisfied that the strength of the banking sector is a reflection of the strong performance of the economy overall. It is important to note that the profitability of the banks reflects both their international and domestic business, encompassing wholesale, corporate finance and investment banking, as well as retail banking activities. The contribution of the sector includes significant tax revenues — PAYE, PRSI and taxes on profits, which amounted to €1.5 billion in 2004 and a further tax collection of €112 million in the same year in respect of stamp duties on cheques and charges on cards, etc. To sustain this contribution, the banking sector, in common with the enterprise sector overall, must remain internationally competitive and profitable, generating sufficient income to reward its shareholders and staff and to meet its future investment needs.

The issue of competition in the banking sector was the subject of a comprehensive and detailed study by the Competition Authority published last year. Some important actions have already been taken in line with the recommendations of the report which were intended to increase the banks' responsiveness to customers' needs, thereby increasing choice and the quality of services provided. I am aware of the role that greater competition can play in the domestic market, and in that context, the arrival of new entrants in recent years is welcome.

Additionally, any EU-licensed bank can sell its products throughout the EU through branches in other member states, supervised by its home supervisory authorities, and a number of European banks are active in the Irish market on this basis. This means, for example, that Irish depositors are not restricted to the services of domestic banks.