Burton at odds with officials on investment bank plan
Published 07/02/2011 | 05:00
Labour Party deputy leader Joan Burton last night hit out at the Department of Finance's credibility as she dismissed its criticism of her proposed investment bank.
Ms Burton's plan to set up a bank to lend to small businesses and pay for infrastructure projects is a central plank of Labour's economic policy.
But the party's finance spokeswoman cannot say how many staff or branches the new bank would need.
"It would be a tight operation. This is not a retail relationship bank. It is an investment bank," she said.
After an initial investment of €2bn from the state pension fund, Labour's new bank would ultimately go to the international markets for funds. The Department of Finance has consistently said such a move would mean competing with the main banks for scarce funding. Ms Burton rejected the criticism and said Labour was proposing the raising of funding through savings bonds.
"The Department of Finance have got a couple of little things wrong in recent times so they are no longer the oracle that they once were, let's be honest," she said
Finance Minister Brian Lenihan said Labour's bank did not stand up to scrutiny.
"When market conditions improve Labour's ambition is that its bank will become a fully functioning bank, taking deposits and raising funds.
"At that stage our two major banks, Bank of Ireland and AIB, will be in a position to return to their correct role of supporting businesses and consumers in this economy. The State has already given substantial support to these two banks.
"As a result, we own most of the banking system. We need them to return to sustainability as soon as possible. What sense does it make for any government to set up yet another state-owned bank to compete with these two banks for funding and customers?" he said.