Dukes calls for rapid overhaul of banks

 

RESTRUCTURING:THE CHAIRMAN of Anglo Irish Bank, Alan Dukes, has called for a rapid and sharp restructuring of the Irish financial system to create at least two viable banks.

Mr Dukes said that the European Commission, International Monetary Fund and European Central Bank must move quickly to repair the banks with major changes even if they are painful.

He said that he saw further bank nationalisations.

Speaking to a conference hosted by the Association of Compliance Officers in Ireland, he said there was a danger of accepting “too easily” EU-IMF loans as a contingency fund and that the money would not be drawn down in full.

“We need to take massive and decisive action quickly to produce at least two viable ongoing banks for the Irish system,” he said.

“And the sooner and the more quickly we do that, the more quickly we will get into a position where we can return towards some kind of normality in our relationship with markets.”

He told reporters afterwards that he feared “a kind of slowly-slowly, piece-by-piece change”. The Government’s plan to split Anglo into an asset recovery bank and a funding bank would have to be reconsidered, he said.

He suggested that if the other banks had to be cleaned up, then Anglo could be used to take loans.

He described the bank’s revised EU plan on Anglo’s restructuring as “a bit outdated at this stage”.

Anglo had not received any word back from the European Commission on the plan which was submitted last month, he said.

The bank had suffered deposit outflows but Mr Dukes did not think it was at the same level as AIB and Bank of Ireland, which have lost a combined €23 billion.

Central Bank borrowing to cover the lost bank deposits had become “unsustainable”, he said.

No talks had taken place between Anglo and the IMF and no talks were planned. “It is a pity if there is not some engagement.”

It would also be a pity if IMF-EU loans were not used to restructure the banks and only used as a contingency. Decisive action was needed immediately, he said.

Mr Dukes said the way in which the banking system would use up to €90 billion from the EU and IMF “should be given a proper airing”.

“It is about time we had an open discussion here as to what kind of structure of the banking system we are going to aim for,” he said.

The future structure of the Irish banking system should not be limited to a debate between the Irish authorities and the IMF, he said.