Business Irish

Sunday 17 December 2017

Noonan 'probably only hedging' with bank guarantee claims


Laura Noonan

THE Finance Minister was "probably only hedging" when he recently suggested he might not seek to renew the bank guarantee scheme, the Department of Finance's banking chief John Moran said yesterday.

The comments came a fortnight after Finance Minister Michael Noonan raised eyebrows by telling a parliamentary committee that he was considering not renewing the €120bn guarantee beyond its December deadline.

In a subsequent response he confirmed that he would seek permission to extend the guarantee since it was "important in maintaining the confidence of deposit holders".

"There was a proposal (to extend the scheme) going through government so he (Mr Noonan) was probably only hedging," Mr Moran told reporters yesterday. "I can't see any reason why you wouldn't extend the guarantee, but it's an issue for the Government."

Asked if he thought the scheme should be continued, Mr Moran said it would be "unwise" to lift the guarantee for bank bonds and deposits, particularly given the turbulent market conditions.

"I think there's some expectation from depositors that they want additional comfort for some period of time," he added. "There's no downside to extending it."

Mr Moran also revealed that he expects to get firm proposals from AIB on its next chief executive by the end of the week.

He declined to comment on whether he would support the bank's proposals to offer its next boss sizeable share options on top of a €500,000 salary, saying that "isn't a decision I make".

Mr Moran was speaking after a presentation to the Irish Bankers Federation annual conference, where he warned bankers the Government might begin "spot checks" on banks' small business lending after becoming "disappointed and frustrated" with the lack of cases being brought to the Credit Review Office.

In his address, the Government's banking tzar also warned about the dangers of a €2 trillion fire sale by Europe's banks but said the €73bn sale of Irish banking assets would continue on its current timeframe "unless we have problems".

On the overall European banking crisis, Mr Moran made an impassioned pitch for bailing banks out at a European level rather than nationally.

Nationalising banks forces them to sell off assets outside their home countries, bailing them out at European level would allow them to maintain their operations throughout Europe, protecting the "European banking sector" and preventing "creating silos".

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