Banking on some delusions of grandeur

THE Irish banking sector is in a lot bigger trouble than people thought.

The evidence comes by way of an amazingly audacious, but incredibly naive speech delivered by Irish Life & Permanent plc’s group chief executive, David Went, to the Institute of Bankers in Dublin.

It has to be said that the Irish banking sector is as solid as a rock despite the litany of scandals that erupt regularly.

However, it is the mind-set of the Irish banking community that has to be called in to question.

Mr Went performed a valuable service by giving us an insight in how the nation’s bankers see themselves. In short the bankers believe they are the heroes of the Celtic Tiger economies Mark I and Mark II. I quote from the press release, with the heading “David Went makes strong defence of Irish Banks,” issued on his behalf to reveal his thoughts on the Irish banking sector to the world. “Mr Went said that the banking sector has been the key to the performance of the wider economy in Ireland in recent years.” Bankers, it seems, have been “the key” to our fantastic economic performance, not “a key” player but “the key” player.

Is this the same bunch of bankers who tried to rip-the-Government-off by creating the bogus non-resident accounts and off-shore account scandals; are these the fee rip-off merchants, the foreign exchange rip-off experts, the plunderers of widows and orphan’s funds, the DIRT scandal managers, the overchargers? Oops it is, so it is.

The banks are in fact gorging on the Celtic Tiger taking the biggest profits per client of any banking sector in Europe. In 2003 AIB made €344 profit per customer. This was the highest in Europe and well above the European average of €123, according to JP Morgan’s study on European Retail Banking published this week.

Has Mr Went and his ilk lost touch with reality, or are they so naive as to think they are the key to our successes and should be above and beyond reproach? At a time this economy needed revenue badly the banking cohort systematically put in place a regime which ripped-off the exchequer.

The banks that played a “key” role in developing the economy had to pay a massive €220 million in unpaid tax, interest and penalties to discharge their obligations to the State as a result of the Dirt scandal. For the record, Mr Went’s Irish Life & Permanent plc paid up €9.53 million on the total.

Financially the banks got off lightly, far too lightly. The perpetrators, and their bosses who brazenly tried to fight-off the State’s legitimate demand, got off scott-free. No one spent as much as an hour behind bars for the biggest rip-off in the history of the State. No one even said sorry.

Mr Went it seems to believes the problem is one of communication and “acknowledged” in his speech that the banking sector has failed to get its message across. “With some of the criticisms I hear and read, I wonder whether they’re talking about the unstable banking industry of some third world country or the banking industry at the heart of Europe’s outstanding economy.”

Mr Went said that international investors were increasingly asking questions about the overall level of support for the banking industry in Ireland and said they were very attuned to media - and increasingly political - criticism of the sector.

Mr Went, went on to say: “My concern is that after a period of pretty relentless criticism, we’re coming closer to a tipping point where the cumulative effect could begin to influence the attitude of international institutions towards the sector.”

Oh, so it seems we should keep our mouths shut when people are caught with their hands in the till.

Get real Mr Went.