Ahern defends banks' high profits

Taoiseach Bertie Ahern yesterday defended the profits made by Irish banks, said to be amongst the highest in their sector in Europe. Addressing the Federation of International Banks in Ireland (FIBI) annual lunch in Dublin, Mr Ahern said there was a need for "balance" in the public view of banks' profits.

He argued that the banks made an important contribution to the Irish economy.

Mr Ahern pointed out that when businesses in other sectors reported good profits they were "justly" praised for their achievements. "But a bank with a similar headline profit is assumed to be doing it at an adverse cost to its customers," he said.

"Tax collectors and bankers will never be loved outside their own circles, but there is a need for balance in our view of these things."

In February, AIB, the Republic's biggest bank, announced record pretax profits of €1.7 billion for 2005. This week it emerged that its executives shared pay and bonuses of close to €8 million last year.

Bank of Ireland, whose financial year ended yesterday, this week said it expected this year's earnings to be 15 per cent ahead of 2005, when it reported €1.3 billion in profits.

Speaking at the lunch, FIBI chairman Mike Ryan predicted that the Republic's international banking sector could create at least 8,000 new jobs over the next five years.

"If we look at the growth over the last few years and project out over the next five years, we could see employment in the sector growing from its current level of approximately 18,000 to in excess of 26,000," he said.

The federation wants more progress on the process for negotiating double taxation treaties, so that international banks can avail of exemptions for countries with which the Republic is negotiating treaties. "This would enable us to more readily do business in a larger number of jurisdictions," he said.