MINISTER for Finance Brian Lenihan warned yesterday that there would be “appropriate” punishment for those executives seen to have eroded the reputation of the Irish banking sector over the past number of months.
“The actions of those who have tarnished the reputation of Ireland will be dealt with through the appropriate processes,” Mr Lenihan promised during his budget address to the Dáil.
The minister made the comment while dealing with the thorny issue of how to maintain the Irish banking system and restore confidence in the main financial institutions.
To that end, he announced reform of the role of the Central Bank and the establishment of the National Asset Management Agency to take bad loans off the balance sheets of the major banks. The agency will form part of the National Treasury Management Agency.
“The role of the Central Bank of Ireland will be reformed to place it at the centre of financial supervision and financial stability oversight, providing for full integration and co-ordination of the prudential supervision and stability of individual financial institutions with that of the financial system as a whole. The Central Bank of Ireland will in the future be headed by a commission, chaired by the governor,” Mr Lenihan said.
With regard to finding a permanent new head of financial regulation, the Government has approached former senior Bank of England executive Andrew Large to advise on the best process to select a candidate.
“A key pillar in our economic renewal is a well-regulated financial system. This is essential for domestic and international confidence and credibility. Our sole objective is to ensure that householders can access credit for home loans and consumer credit, that small and medium sized business can fund their enterprises, that deposit-holders have confidence that their money is secure and protected, and that international investors are satisfied about the stability of our banking system,” Mr Lenihan added.
On the subject of the new agency, Mr Lenihan said: “Cleansing and repairing the banks’ balance sheets is considered fundamental to achieving a sustained recovery of the banking system. This will ensure a sustained flow of credit on a commercial basis to individuals, households and businesses in the real economy. The agency will have a commercial mandate and will have the central objective of maximising, over time, the income and capital value of the assets entrusted to it.”
“The global financial crisis has caused extensive and rapid government interventions across the developed world ... Here in Ireland, through the bank guarantee, bank recapitalisation and the protection of public ownership, we have provided very substantial support to the banking sector,” he added.
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