'Two pillar banks' idea will harm customers: Ross

Shrinking the banking sector into two so-called pillar banks will leave customers crucified by a drive for profits, it has been claimed.

As officials open the state’s books and explain the new bank plans to inspectors from the IMF and Europe, Independent TD Shane Ross warned the Government risked a banking duopoly.

The Government is about to pump another €24bn into the failing banks to keep them afloat and plans to shrink the sector from six homegrown lenders to two so-called pillar banks.

But Mr Ross warned Taoiseach Enda Kenny: “By retreating into that position, you’re inviting them to regain the territorial strength that they had in the past and be able once again to crucify the consumer in order to gain increased bank profits.

“Are you happy with that?”

A delegation from the International Monetary Fund (IMF), the European Central Bank and the European Commission returned to Ireland today for a ten day review inspecting the state’s books.

Mr Ross said the Government had surrendered to the IMF and EU after the Government did not force senior bondholders – lenders first in the queue to be repaid – from taking a hit on bank losses.

He questioned why major European bank lenders were treated in the same way as ordinary deposit holders and drew Mr Kenny’s attention to a Financial Times article highlighting the issue.

“What this article says is that senior bondholders are the luckiest people in Europe and they cannot believe their luck that the Irish government, this government and the last government are pursuing identical policies and insisting on paying them when no other government in the world would do so,” he said.

Mr Ross is one of a number of independents and left-leaning TDs calling on the government to hold a referendum on the IMF/EU bailout.

But Mr Kenny said his Government had brought clarity and certainty to the sector by reducing the number of banks.

“Unfortunately because of the constraints placed on the people here, because of the IMF/EU deal, the options that a new government would like to take were quite limited,” Mr Kenny said.

“But you must make decisions, and we made the decision, as a government, to bring about certainty and clarity to the banking sector.”

Sinn Féin President Gerry Adams accused Fine Gael of going from a five point plan in the election to a five point U-turn and said Labour had shredded its election manifesto.

“It is the Irish taxpayers who are paying, not just for your U-turns, but also for the private greed of private bankers,” Mr Adams said.

“And there is no sense of us coming out of this.”

The 10-day IMF/EU mission coincides with a diplomatic charm offensive by Tanaiste and Foreign Affairs Minister Eamon Gilmore to promote Ireland’s case for cheaper bailout loans.

The rounds of talks will start this week with a series of meetings between Mr Gilmore and EU ambassadors.

Elsewhere, Finance Minister Michael Noonan is to meet EU counterparts in Hungary later this week to brief them on the Government’s new banking plans.

Exchequer figures yesterday revealed the state’s finances were €7.1bn in the red and concerns have been raised over the performance of some tax sectors.

The tax take between January and March was €7.5bn – €270m above the same period last year.