Tycoon warns of 'doom' if State controls main banks
Published 20/11/2010 | 05:00
FINANCE tycoon Dermot Desmond yesterday warned that Ireland would be "doomed to an uncompetitive banking system overseen by faceless mandarins" unless either Bank of Ireland or AIB remains outside state control.
The comments came in a wide-ranging speech where the usually media-shy Mr Desmond shared his views on Ireland's bailout, the country's prospects of recovery and the absolute need to protect our corporate tax rate.
On the topic of the banks, Mr Desmond warned that it was "vital" either AIB or BOI "at a minimum" must be handed over to foreign or private ownership to save Ireland's banking system from being entirely overseen by "faceless mandarins in the Department of Finance, the Central Bank and their political masters".
AIB is already en route to 92pc state ownership after a rights' issue later this month. The State's stake in BOI is just 36pc but could rise further if a banking bailout involves more state capital being heaped on the banks.
"Assuming it's highly unlikely that we can get rid of them [the banks] soon unless there is an international visionary banker, Ireland will be forced into tapping alternative funding or into a default," Mr Desmond said. The IFSC founder said people shouldn't get too hung up on issues of sovereignty since "every adult knows that Ireland ceded this sovereignty as far back as the Maastricht Treaty and the subsequent establishment of the euro".
But he insisted that Ireland should "establish straight off" that our 12.5pc corporate tax rate is "completely off the agenda" in any bailout talks with the European Commission, the European Central Bank and the International Monetary Fund.
"Europe needs Ireland's economic position to be resolved, if Ireland is not resolved there will be contagion and it will spread to other countries throughout Europe, so we're not without strength here," he stressed.
Mr Desmond also called on the Government to be more upfront with the public on tax rises and welfare cuts, so people weren't living "in fear and hoarding".
"Equally, if the personal debt mountain is to be managed, detail the reforms and measures now with urgency and do not let the international markets hazard a guess and discount on uncertainty as they do today," he added.
The financier, whose personal worth was valued at $1.6bn by the latest Forbes Rich List in March, insisted that Ireland had the "intellectual" capital to "restore ourselves rapidly" and "deal with any financial difficulties that we may face".
The "fake marvel" of the property boom should not detract from the genuine achievements in growing our exports from €18bn in 1990 to €84bn today, he argued, pointing out that it wasn't a "fluke" that so many technology and pharma companies thrived here.