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Thursday, 25th April 2024 |
| Bank review targets M&A exemptions |
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| The government’s working group review of Irish banks advises that the Regulatory authority should monitor competition in the sector. |
Irish banks are considering the implications of the Government's review of the banking sector in Ireland following publication of the Working Group's Report.
The report focuses on the retail banking industry but proposes radical changes in the regulation of mergers and acquisition, and the monitoring of competition within the industry.
One of the key changes proposed by the review is to remove the exemption of credit institutions from the Mergers, Takeovers and Monopolies (Control) Act, 1978.
The report suggests that ‘proposed mergers should be assessed by the Minister for Enterprise, Trade and Employment and, where appropriate, the Competition Authority in consultation with the regulatory authority for the financial services sector in order to ensure compliance with competition laws and so that they are in the best interests of bank customers and the economy generally.’
The Group also recommended that the Minister for Finance’s role in the supervision of acquisitions of bank assets (Section 77 of the Central Bank Acts, 1989) should be deleted.
This was recommended by the Group on the grounds that there are likely to be more mergers and acquisitions within the European banking industry over the coming years.
As part of the general reporting responsibilities the Group also advised that the regulatory authority for the financial services sector should be mandated to monitor and report on competitiveness in the financial sector as it affects bank customers.
The working group also proposed that the Central Bank carry out a full review of the organisation of retail payments system and its report should be provided to the Minister for Finance and published.
Electronic payment systems were endorsed as the future of banking and a key recommendation of the report was to channel some of the industry’s savings, made through recent reductions in Corporation Tax, into making electronic payment methods such as internet banking more affordable. The group suggested that paper-based transactions should retain appropriate charges.
‘In the context of the banks having implemented proposals on this, the Group recommends that the Department of Finance should then review taxation arrangements for payment mechanisms with a view to promoting the move to more efficient (e.g., electronic) systems.’
The final proposal of the Group focussed on developing a strategy to maintain appropriate levels of access to banking services in all regions and by different social groups.
‘The banking industry needs to develop a strategy to address the issue of maintaining mechanisms for and levels of access to banking services… The regulatory authority for the financial services sector should monitor and report on this from a customer perspective.’
Minister for Finance Charlie McCreevy had invited the banking industry to send him its views when he spoke to the annual dinner of the Institute of Bankers in Ireland in November 1999. The group subsequently received submissions from the two main banks, the Irish Bankers Federation, the Financial Services Industry Association and the trade unions involved in the sector. The Group concentrated on the retail banking on the grounds that market forces will ensure adequate competition in wholesale banking services.
Minister McCreevy welcomed the report’s findings of the report. ‘Economic growth, the advent of the euro and above all, technological developments such as internet banking provide an opportunity for faster, cheaper and more convenient banking services for all. The challenge first and foremost is one for the banks themselves. But I have always made it clear that I will not be found wanting in proposing any changes in legislation which are required to ensure that we have a competitive and efficient banking sector. |
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| Article appeared in the August 2000 issue.
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