BANK OF Ireland and Allied Irish Banks were “fundamentally sound and solvent institutions’’, Minister for Finance Brian Lenihan assured the Dáil.
He said there had been speculation that nationalising Anglo Irish Bank somehow changed the position of the two other institutions which were the subject of recapitalisation plans.
“The Government reiterates that it sees Bank of Ireland and Allied Irish Banks as central to the Irish financial system and essential to the proper functioning of the economy.’’
The Government wished to ensure that both banks remained independent. “The Government reaffirms that it is proceeding with the planned recapitalisation of Bank of Ireland and Allied Irish Banks on this basis and its firm intention is that both banks remain in private ownership.’’
Mr Lenihan said the Government reiterated its intent to provide €2 billion to each institution from funds already earmarked in the National Treasury Management Agency for that purpose.
He said there had been some recent media debate regarding the effect of the measure on Government accounts.
“Taking Anglo into State ownership should have no immediate impact on either the general Government debt or current deficit as Anglo is a going concern and will continue to operate as a commercial bank. As with other commercial State companies, its debts and its assets will remain on its own books.’’
Introducing the Anglo Irish Bank Corporation Bill, the Minister said nationalising the bank was in the national interest and had been taken to safeguard the economic future of the country and the viability of financial institutions.
“The Government is determined to protect the taxpayers’ interests by putting clear blue water between the new Anglo Irish Bank and the unacceptable behaviour that has gone before.’’
Mr Lenihan said he believed the Government’s proposals on capitalisation would strengthen both AIB and Bank of Ireland as financial institutions central to the economic future of the country.
Intensified oversight of Anglo Irish Bank in recent months had brought to light “unacceptable practices’’ by the former chairman and some of his staff.
“The concealment of loans to directors, and the scale of those loans, have done serious damage to the reputation of Anglo at a difficult time in the markets.
“These matters are now the subject of a number of investigations being undertaken by the Financial Regulator and the Director of Corporate Enforcement.’’
Those investigations must be followed up both by the regulator authorities and by the bank itself.
“I will be insisting on this as shareholder and as the Minister responsible.’’
Mr Lenihan said about 7,000 customers, 5,000 of whom were Irish, had loans from Anglo Irish Bank. The total number of retail depositors was about 300,000, of whom 72,000 were Irish. The total number of corporate deposits was about 12,000, of whom about 3,500 were Irish. He said a PricewaterhouseCoopers report could not be published because it contained the details of customers and customer information in several Irish financial institutions.
“That cannot be disclosed in this House, or in the public domain, given the fundamentally confidential character of the relationship that always exists between a bank and its customer.’’
Mr Lenihan said Anglo Irish Bank was a major financial institution, with a balance sheet in excess of €100 billion. “Contrary to the impressions being put about, the bank lends to a wide range of customers, providing funds for investment and employment in areas such as retail, office, leisure, healthcare, tourism and other services.’’
