Pearse Doherty (Donegal South West, Sinn Fein)
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41. To ask the Minister for Finance his views on the Royal Bank of Scotland’s review of Ulster Bank, the poor financial performance by Permanent TSB and if the possibility of merging the two banks has been discussed. [16066/14]

Michael Noonan (Limerick City, Fine Gael)
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In Autumn 2013, following a review of its operations by the UK Treasury, RBS reaffirmed its commitment to the Irish market.  As part of that process, Treasury officials engaged with officials from my Department. 

In February 2014, I met with RBS executives to ascertain their outlook for the bank both here and in the UK. RBS is currently reviewing the operations of Ulster Bank in Ireland with a view to creating a sustainable business model, and on 27 February 2014, RBS re-iterated its commitment to the Irish market. It is good news that the bank has committed so firmly to the Irish market. 

From a domestic banking perspective, the continued presence of a viable and active Ulster Bank in the Irish market will be important in fostering competition for banking services. It is vital that businesses and consumers have a range of banking options available when using financial services and accessing credit - all of which will become increasingly important as the economy recovers. Officials in the Department of Finance have been in contact with both RBS and Ulster Bank officials and this will continue as the bank finalises its plans for the future.

Similarly my officials regularly review the performance of Permanent TSB particularly with regard to the resolution of mortgage arrears and other non-performing loans and the re-establishment of the bank as a competitive presence in the Irish domestic banking market. In these, and many other areas, the management team of Permanent TSB has made considerable progress and while the indentifiable legacy issues continue to impact on the financial performance they are being pro-actively managed.  

  Now that the Programme of Support is over, it has been succeeded by the Government's Medium Term Economic Strategy. One of the key planks of the MTES is making sufficient credit available and in this regard I am examining a whole series of options for both bank credit and non-bank credit. 

  In addition to the many initiatives relating to non-bank credit, the Deputy will be aware that I would like to see more competition in the domestic banking system to provide the lending required for our growing economy.  One option would be to continue to build up Permanent TSB.  I would also welcome the participation of foreign banks in Ireland, possibly by way of  partnership with some of our domestic banks.     

  I have not yet formed a view on the structure of a banking system which would support the needs of the Irish economy, and this will require further evaluation over the coming months and years, as the State and the banks currently operating in Ireland normalise and put the legacy banking issues, which were the priority when I came into office, behind them.