THE GOVERNMENT is determined to ensure that the Irish banking sector “under full public direction” will resume its place as a lender of credit in the economy, the Minister for Finance has said.
Brian Lenihan said the Government would deal with the reform of the banking sector “in the next few weeks”.
On Thursday, AIB and Bank of Ireland had lost 98 per cent of their share value over 12 months in what was another difficult week for the banks.
Mr Lenihan told a group at Connolly Hospital in Dublin who had just been awarded a European research grant that the country was facing a very difficult year.
There could be “four, five or minus six per cent shrinkage” in the economy, he said, and a lot of people were saying different things about Ireland around the world.
“There is a very negative message about our financial services going around the world. I think it’s important to reassure you that we’re determined to repair the damage that has been done to our reputational image by what did happen in one particular bank.
“We are also determined to ensure that the Irish banking sector, under full public direction, will resume its place as a lender of credit into the economy.”
He said the Government would move on from arguments about the excessive exposures the banks went into with developer and property interests.
It was a central objective of Government policy to put the banks back where they should be as an engine and motor of growth and credit in the economy, he said.
“Alongside the necessary budgetary measures that we will have to take in the next few weeks, we will also deal with the reform of the banking sector.”
They would be plotting a chart and a course for the economy in the next 2½ years that would stabilise and renew the economy again, he said.
Asked whether “full public direction” meant the Government intended to nationalise AIB and Bank of Ireland, Mr Lenihan said the phrase meant he would be “giving leadership in the direction of the banking sector”.
“There’s a capitalisation programme for the two main banks,” he said.
“It’s not a matter of a decision on nationalisation; we’ve always made it clear we’re not nationalising the banks.”
