Sale of State assets
Madam, – The decision of Royal Bank of Scotland Ireland to withdraw from Ireland, while regrettable, is one that brings into sharp focus the often drastic consequences of short-term policy- making.
Less than 10 years ago Royal Bank of Scotland Ireland entered the Irish banking market through the purchase of the then State-owned ICC (Industrial Credit Corporation). Its entry into the market followed the decision of the government of the time to divest itself of ownership of the ICC.
If we fast-forward to today we currently have a banking sector propped up by the Irish taxpayer to the tune of many billions of euro. Through the recapitalisation programme the State has acquired a major stake in the two main banks and still we hear daily complaints from the business sector about the unavailability of credit.
It now seems clear that the decision to sell ICC was a major mistake. If ICC was still in State ownership it could be used as a vehicle to provide capital to small business, while at the same time allowing the Government to intervene in the banking sector in a proactive and probably less costly way.
Our immediate concern is for the future of the employees of Royal Bank of Scotland Ireland. However, we should be very careful not to sacrifice the long- term strategic interests of the State by taking decisions which might be seen by some as attractive in the short term. The Government has established a committee headed by Colm McCarthy to look at the position of assets in the ownership of the State. Surely the decision of the Royal Bank of Scotland demonstrates that it is vital that the State continues to play an active role in certain sectors of the economy and that the privatisation of State assets can be very damaging indeed? – Yours, etc,