Fine Gael vows to cut costs of running banks

FINE GAEL has promised to cut banks’ running costs in order to limit increases to variable mortgages.

But the party refused to give a guarantee yesterday that it would safeguard the jobs of ordinary bank workers in the cost-cutting process.

Party finance spokesman Michael Noonan said he could not give any such guarantee, but stressed that Fine Gael’s preference would be for the costs to be reduced in other ways.

It came as the party launched its banking strategy, entitled Credit Where Credit Is Due, at a press conference in Dublin.

Mr Noonan said the Government had made an “absolute shambles” of the banking sector.

He said the EU/IMF bailout agreement would not restore confidence in the sector because it was supporting the “failed banking policies” of the Government.

Fine Gael’s first step would be to renegotiate the bailout with Ireland’s EU partners in order to produce a more sustainable deal.

The party would then seek to clear out any remaining directors and senior managers in the banks who were in place prior to the state rescuing them in September 2008.

EBS would be sold to a private investor and Fine Gael would consider selling AIB to a “large, foreign bank in order to bring access to new funding and capital” for domestic businesses.

“We will seek to retain Bank of Ireland under domestic ownership and control, and will consider giving individual Irish citizens an option to buy the state’s shares at a price that, at the very least, recovers the investment made by taxpayers,” the strategy states.

Anglo and Irish Nationwide, by contrast, “have no further role to play” in the economy and would be shut by the end of this year, according to the document.

Within this overall restructuring of the sector, Fine Gael is promising an array of supports for struggling mortgage holders.

Mr Noonan said that within its first 100 days, a Fine Gael government would direct any mortgage provider in receipt of state support to present it with a plan to cut its wage bill and running costs.

The aim would be to save circa €100m, which would allow the banks “forego” a hike of a quarter of a percentage point on variable mortgages.

Mr Noonan said Fine Gael would also increase mortgage interest relief to 30% for first-time buyers who had purchased their homes between 2004 and 2008.

Away from housing, he also pledged an array of supports for businesses in need of credit.

Party strategy: How FG would deal with the banks

- Renegotiate the EU/IMF bailout so that the cost of rescuing the banks to the Irish state and taxpayers is reduced.

- Change the way NAMA works to further reduce taxpayer exposure.

- Shut Anglo and Irish Nationwide by the end of 2011.

- Sell EBS and consider selling AIB.

- Clear out remaining senior management and directors at the banks who were in place when the crisis occurred.

- Order the banks to reduce their running costs to prevent an increase of a quarter of a percentage point in variable mortgage rates.

- Increase mortgage interest relief for first-time buyers who purchased at the height of the market and are now struggling as a result.

- Increase supports for businesses in need of credit.