Bringing the banks to heel
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COULD the banking sector be coming to heel at last? The Minister for Finance says that negotiations with the financial institutions are nearing a conclusion and has promised that the Government is to inject fresh capital into the banks within days.
Ireland is now one of the few countries in the world not to have begun recapitalising its banks.
The international markets need to be convinced that Irish banks' bad debts will not gobble up new capital. The 'bad bank' is one option, but the Government is said to be less than keen on that idea, and is considering other recapitalisation guidelines from the European Central Bank.
Irish banks, once the beating heart of a vibrant economy, are likely to face transplants in the months ahead. Employees of First Active have already fallen foul of the changing climate with the announcement that the mortgage lender is to be subsumed into its parent company, Ulster Bank, with the loss of 750 jobs. In the meantime, there are signs of creeping reform. Measures announced yesterday will mean that bank directors will be required to reveal any loans they have with the institution. Even loans to people with connections to directors will have to be disclosed.
Welcome measures to protect home owners from repossession under certain circumstances are included.
Sadly, if we had only known, a year ago, that the banks needed to be subjected to a code of conduct, much pain and distress might have been averted.
