News & Media

Review of banking welcome but independence of process in question

24 November 2021

Statement by Ged Nash TD
Spokesperson on Finance, Public Expenditure and Reform

Labour’s Finance Spokesperson Ged Nash has welcomed the publication of the terms of reference of the review of the retail banking sector in Ireland.

However, he questioned how the process can be truly independent given the fact that the review itself is being undertaken by officials of the Department of Finance.

He said:

“I and others have been calling for a top-down comprehensive review of the Irish retail banking sector for over a year now. The process has become even more pressing with the impending exit of Ulster Bank and KBC from the Irish market.

“Interest rates on mortgages and loans to SMEs are already among the highest in Europe. Fewer lenders will lead to greater market dominance for the remaining banks at a time when customers and the economy need greater competition, not less.

“With new disruptive technologies and other finance alternatives growing in prominence and market share it is fair to say that the banking and finance landscape is changing before our eyes.

“While it is welcome that the Minister for Finance has embarked on this year-long review, this is not the kind of open, wide and public forum many of us had in mind.

“It would have been preferable if a process chaired by an independent, outside expert was put in place instead of the Department of Finance managed review announced by the Minister today.

“The Department of Finance has significant skin in the banking game. The State owns the majority shareholding in AIB and PTSB, and a diminishing share in Bank of Ireland.

“The terms of reference of the review are tight yet extensive. While the Labour Party will give the process a fair wind, I have reservations about the Department itself carrying out an undertaking of such significance given the levels of direct State interest in the banks and in light of the fact that the Programme for Government commits the government to ridding itself of State shareholdings in any banks.

“Retaining strategic shareholdings in certain institutions should not be ruled out as this could prove to be a fruitful way for the State to influence the banking and lending landscape into the future.”