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  • irishtimes.com - Posted: October 1, 2008 @ 11:32 pm

    Should we be worried? Does anybody really know?

    Harry McGee

    The Government has now added non-Irish banks into the scheme, though it seems the rider about a “case-by-case” basis may just confine it to Ulster Bank, and possibly to NIB.

    The excluded banks lobbied ferociously today and from mid afternoon it was clear that Ulster Bank was confident that it would be included.

    But where does it stop? Does Halifax, with a retail operation in Ireland, have an equal claim? And why not IIB? And there are other non-high street banks which provide financial and banking services in Ireland  though owned by a foreign company. Will they not be put at a disadvantage?

    There are three problems emerging with the legislation.

    1. Competition issues in Ireland.

    2. Potential problems with Europe.

    3. The unknowns about the scope and extent of the exposure to the taxpayer.

    The estimate for the six ‘indigenous’ Irish banks was for €400 billion. The upshot of including extra banks will mean futher exposure. It’s clear that at least some of the institutions were scarily exposed to commercial property and are nursing loans that should have been written off as bad debts but are being kept alive in intensive care.  Alan Ahearne of NUIG has described these property companies being artificially being supported by the banks as ‘zombie companies’. It’s very hard to know – in fact, it’s impossible – to know if this will make any difference. Labour tonight described it as a ‘Pandora’s Box’

    One long-standing Fianna Fail TD who knows his way around the financial markets and the world of economics was saying that there may be a painful revisit to this decision for Ireland in six months time.

    Some of the other implications give rise to what may be hazards. Financial advisers in Britian were advising people to put their deposits into the Post Office in Britain on the basis that its saving operation is owned by Bank of Ireland. Is that good or bad? Good on the face of it as it can help capitalise the bank but bad if there are wobbles which lead to a run on the bank.

    • Ray Dollard says:

      An absolutely brilliant move conceived no doubt by the maligned civil service – bold and decisive. It is clearly a Lisbon NO type move. Let us retain our essential independence.

    • martin says:

      ZEITGEIST ADDENDUM, watch and learn.

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