Forget Nationwide: set up an enterprise bank

RECENT media comment suggests Irish Nationwide may now require up to €2bn extra capital.

Injecting money we don’t have into an institution we don’t need makes no sense.

The idea that a mutual (run for the benefit of members) could actually be run by a select few for a select few,resulting in more than 80% of its loans being placed into NAMA, raises a lot of questions which I hope will be pursued with vigour by the authorities.

In the interim, why not put the €2bn into a new development bank. It should be possible to match this with at least €4bn of borrowings in the markets, making it a €6bn fund with 33% capital ratio.

Standard & Poor’s estimates lending to non-property companies in Ireland totals €50bn. This money would increase lending by an extra 12% into the SME and general corporate sector. It would make a huge difference. Even if it only lent the €2bn, it would be a start.

Let’s be frank, the state is unlikely to get back any of the €2bn injected into Irish Nationwide. Even if the state used the €2bn to lend to companies and never got a penny back (most unlikely), it would still be no worse off than ploughing it into a dead bank. It’s not too late for this debate to take place. But it needs to happen now.

John Finn

Ballyorban

Monkstown

Cork