Banks should stay in private sector, says Went

THE NATIONALISATION of Irish banks is not good for the industry and banks should remain in the private sector, according to the chairman of the Financial Regulator’s consultative industry panel, David Went.

“I do not think that nationalisation is a particularly good thing for the industry as a whole. Ultimately, I would be surprised if all the banks were nationalised,” he said.

Speaking at the Irish Insurance Federation (IIF) annual meeting, Mr Went added that the creation of the National Asset Management Agency (Nama) was a good idea and would ultimately help “prevent inter-bank squabbling”.

He said he remained sceptical about Anglo Irish Bank, which announced a pre-tax loss of €4.1 billion yesterday, reinventing itself as an SME bank.

“That is a remarkably difficult thing to do and I am not sure what it will achieve in the long term. I am not sure it is a very sensible approach.”

On regulation, he said it was important not to have a closed mind about whether a rules-based or principles-based regulatory system was the best way forward.

“There needs to be appropriate recognition that we do not have a homogenous financial services industry and, in particular, that we need to avoid a ‘one size fits all’ approach to the implementation of the new regulatory regime,” he said. “This is particularly important in the insurance arena where Solvency II, towards which all global insurance regulation is moving, is of course a principles-based system. For Ireland to move unilaterally away from that would be nonsensical.”

Everyone in the financial services industry wanted and needed a robust and fair regulatory system that was well regarded internationally, he said. “Above all, the decisions that have to be made require appropriate regulatory regimes consistent with international best practice for particular segments of the industry.”

IIF president Brian Forrester added that pension reforms should not be delayed.

“We are now in a position in the life and pensions sector where new investment business has effectively dried up, asset values have been slashed beyond all previous predictions, and margins are so tight and the prospects so bleak, that our member companies’ very futures are at stake.”