THE CHIEF executive of Permanent TSB told a gathering of financial service professionals that the banking sector bore chief responsibility for the State’s financial woes, and that the entire industry had been “humbled” by events over the past year.

Speaking at the annual dinner of the Institute of Bankers, David Guinane said: “As bankers, we must recognise first and foremost that this crisis has been caused by the failure of our sector to fully understand and manage the risks inherent in our business.”

He said the banking sector had made poor judgments with respect to lending and investment, and that these errors had been compounded by poor corporate governance.

Acting as president of the institute, Mr Guinane said that the banking sector should express contrition and appreciation for the support it had received from the State.

“We in banking must continue to demonstrate to fellow tax-payers and the Government our regret for these failures of judgment and governance,” he said. “We must also show our gratitude for what has been done to stabilise the Irish banking system, despite the increasingly difficult fiscal environment.”

Mr Guinane said banks should reciprocate the consideration and assistance shown to them, and that they had a duty to treat customers who had encountered financial difficulties in a fair and measured manner.

“They have the right to expect that Irish banks will be committed to dealing generously and imaginatively with customers who are in difficulties – as we in this industry were treated with generosity and imagination in our difficulties,” he said.

Permanent TSB came in for sharp criticism last July for its perceived insensitivity to mortgage holders after the bank raised its standard variable rate by half a percentage point, a move that affected about 50,000 of its customers.

Mr Guinane said the Institute of Bankers was now committed to directing the banking sector away from speculative investing and back towards its traditional public utility role.

“It is clear that over the past decade and more, there was a disproportionate focus on property and construction.

“The Government and public are entitled to expect that the renewed, well-capitalised banking system will have the resources and expertise to prudently support those enterprises and individuals requiring finance,” he said.