MINISTER FOR Finance Brian Lenihan has said the Government is seeking to maintain private ownership within the banking sector but that it may take a large stake beyond the 55 per cent of the system that it already controls.
Speaking to the annual conference of the Association of Compliance Officers in Ireland (ACOI), Mr Lenihan said that the banking system “has to be seen by the world market as belonging to the world market” and not simply managed by the Irish Government.
Mr Lenihan said that it was not as if the two biggest banks, Allied Irish Banks (AIB) and Bank of Ireland, were not being nationalised.
“It might be fairer to say that what we are doing is struggling to maintain a private presence in our banking sector,” the Minister said.
The new chief executive of State-owned Anglo Irish Bank, Mike Aynsley, plans to make imminent changes to the management team, Mr Lenihan told reporters before his speech to the conference.
Management changes had been agreed with Mr Aynsley, said the Minister. He also said legal proceedings were being issued against directors and senior managers who owe money to the bank.
“He has done a complete analysis of the monies that are owed by the different directors and executives of the bank,” said Mr Lenihan. “Some of them are paying on foot of their loans; some are not. Those who are not will now be sued in the courts.”
Mr Lenihan ruled out the immediate closure of Anglo, saying it would lead to the State paying “a huge sum of money”. “Anyone with any intuitive sense knows that if you go in and close down the bank, you immediately trigger a huge liability for the taxpayer and we are not proposing to do that.”
It was possible “to devise a plan that, over time, the taxpayer is recompensed” for the investment in the bank, the Minister said.
The Government has injected €4 billion in additional capital into the bank to cover rising loans losses. Mr Lenihan has said any further capital required by the bank will not exceed the €4 billion already invested by the State.
The Minister defended the Government-appointed directors at Anglo and praised their work. The public interest directors – Frank Daly, Alan Dukes, Donal O’Connor and Maurice Keane – “in effect had to be executive directors to salvage this bank which amounted to a systemic threat to the Irish economy”, he said.
Mr Lenihan said that taking “decisive action” on the budget deficit was a priority for the Government and it would “signal to international investors that the Irish Government possesses the ability to take the necessary action”.
Failing to do so would “mean delaying necessary action with the result that even tougher decisions would be required in the future”.
“We will ensure that our children will not inherit a mountain of public debt,” the Minister said.
AIB chief executive Eugene Sheehy, who will retire at the end of the month, and the bank’s new executive chairman Dan O’Connor – together with Bank of Ireland governor (chairman) Pat Molloy and chief executive Richie Boucher – will appear before the Oireachtas finance committee tomorrow. The bankers will discuss the interest premium over cost of funds they will charge customers to restore the two banks to profitability.
