Ireland's banks are effectively up for sale, Governor of the Central Bank Patrick Honohan said today.
"They are for sale as far as I am concerned," Mr Honohan said jokingly to laughs from the audience during an address to Chartered Accountants Ireland in Dublin. "I've been an advocate for a number of years for small countries to have foreign owners for their banks."
Mr Honohan said banks could build confidence by disclosing much more information to the market, leading to lower borrowing costs.
"We will have a slimmed down banking system that is much better placed to serve the needs of the economy into the future," he said in the speech. "While all of this will take some time to be worked through, we can be reassured by the announcements of recent days that the banking system retains the support, not only of the Central Bank of Ireland, but of the European institutions."
Mr Honohan said new tests for the banks carried out next year would take account of evolving economic and loan performance developments and prospects over the year.
"I find it unsatisfactory that expected losses in many parts of the portfolio are clearly higher than the provisions already taken, because I fear that this evident and in some cases explicit discrepancy may awaken doubts in the minds of investors as to the relevance of other aspects of the reported accounts," he said.
"Communicating more information to the market would not only enlist the expertise of market credit analysts in a way helpful to all, but could lower the cost of term borrowing as investors regain confidence."
Mr Honohan said banks could provide more extensive detail on their residential mortgage book, including the size distribution and aging of loans. He said formal regulation may not be needed to encourage banks to provide the information, as they would gain by doing so.
"The banks might do well to call in the leading credit analysts and find out what information would be of greatest use to them in identifying and quantifying tail risks," he said.
Shares in AIB fell 15.9 per cent to 34.3 cent, while Bank of Ireland slumped 29.3 per cent to 27.5 cent.
