Gerald Nash (Louth, Labour)
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34. To ask the Minister for Finance if he sought the views of the Central Bank on a statement (details supplied); and if he will make a statement on the matter. [21078/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy will be aware that it is the responsibility of the Regulator to set the level of capital which each bank is required to hold. These capital levels are determined within the context of a robust EU regulatory framework which is designed to ensure a safe banking system that can support the economic needs of each member state.

One of the key inputs in this regard is historical loss experience and, as is well understood, Ireland’s experience during the Global Financial Crisis was amongst the worst in Europe. Accordingly, Irish banks are required to hold more capital than in other jurisdictions for the same asset classes.

Two recent research papers by the Department of Finance and the BPFI analysed this matter specifically in relation to the level of capital required to be held by Irish banks for residential mortgages relative to other European jurisdictions. Both of these papers were consistent in their summary of the relative position and the underlying reasons for this. These papers are publicly available on the Department of Finance and BPFI webites.

Gerald Nash (Louth, Labour)
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35. To ask the Minister for Finance his views on whether a public review on the strategy for the banking sector should be undertaken to set out a vision for the future particularly at present when he is in a position of significant influence (details supplied).; and if he will make a statement on the matter. [21079/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The announcement by KBC Bank Ireland last week that it is leaving is a very significant development for the retail financial sector in Ireland, particularly as it comes so soon after NatWest’s decision to withdraw Ulster Bank from the Irish market. Firstly, I am concerned about the impact of this decision for KBC’s staff and customers.  It also raises concerns regarding wider issues in the retail financial sector, in particular for competition and for the sustainability of the sector. Sustainable and responsible competition in the retail financial sector is vital to ensuring that businesses and consumers have a range of banking options available when using financial services and accessing credit. 

My Department and I keep the policy framework for the banking sector under regular review and, in light of the events of the past few months, will further examine the policy framework to ensure that it supports a sustainable and competitive dynamic within the retail financial sector. 

I presume when the Deputy is referring to me, as Minister, being in a position of significant influence, he is referring to the shareholding held by me on behalf of the State in AIB, Bank of Ireland and Permanent TSB. However, as the Deputy will be aware, the independence of banks in which the State has a shareholding is protected by Relationship Frameworks, which are legally binding documents that cannot be changed unilaterally.  Accordingly, I cannot interfere in the operations or strategy decisions taken by the banks on a commercial basis.

Gerald Nash (Louth, Labour)
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36. To ask the Minister for Finance his views on whether local control of at least one Irish bank is very important to the development of the small Irish economy in a globalised world and to assist the operation of businesses by SMEs and taxpayers in Ireland; and if he will make a statement on the matter. [21080/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government does not see the State as a long-term investor in the banking sector and its policy of selling down its investments in the Irish banks remains unchanged. However, given the extent of these investments, this was never going to be achieved in the short term and was always going to require a series of sell down transactions possibly spread over more than one market cycle.

In relation to the Deputy's question on my views on retaining control of at least one bank, what the country needs is more private sector investment in its banking sector. Government can and does play an important role in many ways, providing various support schemes for instance, but it should not be a major owner of banks, which is about taking risk and deciding who should get credit and who should not. It is by definition a volatile business where one's investment can be severely impacted or even lost in extremis.

Significant progress has been made in monetising the €29.4bn originally invested in AIB, BOI and PTSB. To date, €19.2bn has been received in the form of sale proceeds, investment income and liability guarantee fees. The Department of Finance reviews opportunities on a continuous basis, to sell its remaining investments in these banks which are currently valued at approximately €5.5bn. Any such sales will be subject to market conditions and will be transacted in a manner which generates the best value for the taxpayer.