Lenihan: Government will use its authority to get banks lending again

By Brian O’Mahony

Friday, November 27, 2009

FINANCE Minister Brian Lenihan has warned the Government will use its powers under NAMA to ensure banks start lending to cash strapped businesses.

Mr Lenihan disagreed with comments to an Oireachtas committee on Wednesday by outgoing CEO of AIB Eugene Sheehy that credit would not flow automatically once NAMA was set up.

The minister said: "The Government has taken specific powers in the NAMA legislation to make credit available to support the economy. Those powers are in the legislation; the president has signed it."

He also refused to comment on possible tax changes in the budget and stressed the importance of maintaining a competitive corporation tax rate to ensure the US multinationals continued their major role in Ireland. Mr Lenihan was speaking at the Thanksgiving lunch of the American Chamber of Commerce in Dublin.

US multinationals have close to €150 billion invested in Ireland, more than their combined involvement in Brazil, Russia, India and China. The 600 firms employ 100,000 directly and another 200,000 plus in back up services. They also account for 40% of all corporation taxes raised.

Referring to Bank of Ireland’s declaration that it would not need any more State capital, the minister said: "I’m glad to see their optimism but I am not going to discuss any particular institution in advance of the agency valuing their loan books in detail."

Such matters as lending and capital raising would be worked out as NAMA is put into place, he said.

Commenting on the row over the appointment of Colm Doherty to the post of AIB managing director, Mr Lenihan said "cultural hostility to bankers" and over-zealous media attention, not the salary cap of €500,000, delayed the recruitment of new chief for AIB. He also said he accepted comments by former Tánaiste Dick Spring, a government appointee to AIB’s board, that Doherty was the best available candidate.

Paul Duffy, president of the American Chamber of Commerce, stressed the importance of a competitive base as a pre-condition" for multinationals to continue to play a vital role in the Irish economy.

If a carbon tax is introduced it must not add further to the already high cost of energy in Ireland, he said.

This story appeared in the printed version of the Irish Examiner Friday, November 27, 2009