Noonan explores idea of a new bank

A significant new bank with a big balance sheet could drive competition in the diminished lending sector, Finance Minister Michael Noonan said at the weekend.

The banking crisis, which helped push the country into the bailout, led to the closure or merger of half of banks and the exit of a slew of foreign lenders.

It has also left the country with only three SME lenders of scale, AIB, Royal Bank of Scotland’s Ulster Bank, and Bank of Ireland, which counts the State as a 14% shareholder.

“We are talking about a bank with a big balance sheet... A third significant player,” Mr Noonan told reporters at the Fine Gael annual conference after he said in a speech that he would like to see a third viable bank in the country.

“I’m exploring it. I know there are people interested. In the course of this year, it would be nice to get these things done before banking union,” he said, referring to the EU’s plan for a more integrated banking system.

Mr Noonan said he absolutely wanted mortgage lender Permanent TSB, currently the third domestic-owned bank in the country behind Bank of Ireland and AIB, to remain part of the banking sector.

His comments come after Flip, a proposed European bank, kicked off formal fundraising to raise €100m to allow them cash in on Ireland’s newly-concentrated banking market and slowly recovering economy.

However, Mr Noonan said he was looking for a much bigger lender than Flip and Permanent TSB to enter the market and that he was sending a signal out that there is a space to do so.

“They were talking about €100m, €100m wouldn’t capitalise a bank,” Mr Noonan said, referring to Flip’s proposal. “The amount of money they were talking about was far too small.”