Business Irish

Thursday 25 April 2019

Banking chiefs seek 'dig-out' from taxpayers

Senan Molony Deputy Political Editor

THE Government was yesterday urged to directly intervene to help banks and financial institutions to overcome the global credit crunch.

Senior banking chiefs asked the State to consider providing a domestic finance guarantee -- which would help the retail banks in lending, including mortgage loans.

They said this would help ease the credit crunch, making it easier for institutions to lend money, and, in turn, help customers to obtain loan approval.

It would help revive the property market and the economy generally, the Dail finance committee heard yesterday.

Richie Boucher, the chief executive of Research Financial Services Ireland, which comes under the Bank of Ireland umbrella, called for some long-term funding to the banks to be "provided domestically" -- by the State and its taxpayers.

In a letter to the finance committee, which opened in private yesterday, Mr Boucher said international banking sector liquidity was an issue "which would potentially constrain lending capacity". It "was certainly impacting on the price of lending".

He warned TDs and senators that, while Irish banks had recourse to the European Central Bank (ECB) borrowings for liquidity, it would be prudent not to become "overly reliant" on it.

His letter added: "An orderly housing and mortgage market requires mechanisms for mortgages to be funded on a long-term basis -- and for some such long-term funding to be provided domestically."

He noted a number of other countries, including Germany, Denmark, the USA and Canada, have already recognised this need.

Mr Boucher said he was clarifying and expanding on remarks made at a meeting between the joint committee on finance, the public sector and the big banks on July 2.

Soundings

The committee also took soundings on the credit crunch from the Central Bank and the Financial Services Authority before the summer break. The Bank of Ireland, in common with others, says it has liquidity buffers "significantly in excess of any regulatory requirements".

But Mr Boucher said: "I believe that it might be appropriate for Irish banks and the authorities to have a look at the practices and mechanisms available in a number of our trading-partner markets.

"Looking and learning from how other countries address particular issues, and seeing if these can be applied in Ireland, would seem to me to be sensible and good practice."

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