The Government should show its displeasure at the encouragement of non-resident accounts by requiring Allied Irish Banks to immediately repay outstanding State loans, said Mr Shane Ross (Ind).
A bank making profits of more than £2 million a day was allowed to remain in hock to the taxpayer, he complained. Some of the loans were interest-free and they had resulted from a complete debacle in 1985.
Two loans had been made by the government to AIB totalling £132 million. For some reason they had been rescheduled in 1992 and they did not have to be paid off until 2012.
AIB had paid money every year to the Exchequer in repayment of these loans because of the complete mess they made of ICI when they nearly went bust. They were bailed out by the taxpayer.
Demanding immediate repayment, Mr Ross said that would indicate an intent by the Government to come down heavily on the banks. There was no justification whatever for this interest-free luxury to be given to AIB, particularly after the revelations of its recent behaviour.
The biggest banks felt they were above the law. If they were above the law, how could individuals be prosecuted for behaving in the way that they had?
The advantage of having a third force in banking was that it might break down the duopoly being run between the two main banks, which basically involved a cartel in terms of charges. The danger was that a newcomer might join such a cartel rather than becoming a genuine third force. That was something that the new financial regulator would have to look at very carefully.
There was growing evidence that the banks were being run for the benefit of the executives. First Active had been changed from a building society to a bank. As a result, the managing director had, for a risk of only £5, made almost £500,000 in paper options.
The same pattern existed in AIB and Bank of Ireland. The directors of these institutions were massively paid, more than any other directors in this State. They also had risk-free options and were made millionaires many times over for taking no risk. It was the banks which were giving business and capitalism a bad name because of this kind of thing.
Responding to the debate on banking, the Minister of State for Finance, Mr Martin Cullen, assured the House that the Government would be fully supportive of any measures which could ensure that the liability of persons and companies to tax could be reasonably and effectively pursued.
The Government would have to ensure that a balance was struck between having wide-ranging powers to reassure the public of the equity of the tax system and the need to encourage taxpayers to be compliant and to make it possible to settle liabilities.