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It is remarkable how the areas of capital markets finance and wholesale financial services are increasingly disconnected from retail financial services and the issues and controversies surrounding them. There was always a difference between these areas, but the extent of it has grown in recent years.

For example, we now have in Ireland a burgeoning venture capital sector, as evidenced in the exceptional growth highlighted by the most recent European Venture Capital Association figures we report on page 1. The supply of and demand for venture capital and private equity is a market which is part of a global market for funding new, high technology companies. Developments in Ireland are fully integrated into that market. The culture of venture capital investing and usage is international, one may say, American. The corporate finance skills brought to bear in managing different stage financing are as applicable in California as in Ireland and India. The horizon of VC investors and, increasingly, of its users, is not limited to their national base. This is especially true of Ireland. The outlook of most technology entrepreneurs is to participate in international markets both for their products and for their finance. The challenges for users of venture capital particularly is to make sure that their financial skills are as well-honed as their technology, engineering and marketing skills. A whole new area of work has opened up for corporate finance advisers to meet the needs of growing, technology companies.

All this is a far cry from the travails currently being undergone by the ‚€ėdomestic‚€ô retail financial services industry. They may as well be in different worlds. Domestic banks are caught up with tax problems arising from the past, while the venture capital agenda is radically and totally forward-looking. The wholesale or institutional business of financial services is also proceeding quite disconnected with controversies to do with tax collection. For example, innovative securitisation programmes, such as that of EBS Building Society and IIB Bank, proceed apace. The planned introduction of mortgage bond legislation is a related developmental move, one that should not be let fall victim to unrelated tax controversies. Financial and treasury management in corporates is also a million miles away from political controversies involving some of their treasury bank providers.

The spreading out of sophisticated finance skills across the internationally-trading sector of the economy means an ever-greater distance between many people‚€ôs finance work and headline-making controversies all lumped together under the heading of finance and financial services. The danger is that a public and political response to controversies related to tax and retail financial services might spillover negatively into the areas of capital markets finance and wholesale financial services.

It is where the areas meet that this problem of unwarranted, negative spillover can become most apparent. For example, it happens in relation to privatisation - a capital markets exercise, involving large numbers of retail investors as well as wholesale financial services. It may become more difficult to separate the roles of corporate finance advisers, stockbrokers, professional services and retail banking in such circumstances.

Cynicism and hostility to banks over tax issues will not serve the public interest well if a hostile atmosphere grows for the development of capital markets, of finance and of financial services. It goes without saying that capital markets participants, including banks, have a major responsibility for, and interest in, a non-hostile political and public atmosphere for finance and financial services being maintained. It is also a responsibility shared by key public servants and Ministers.

The sooner the past can be consigned to the past, in a manner that is fair to all concerned, the better.

There is plenty of developmental work to get on with in the intersection between public sector, capital markets and financial services providers. One small instance is the need to remove the unnecessary 1 per cent stamp duty on share issuance and transfers. This has been on the agenda for quite some time. The chances that anything will be done about it are unfortunately, and unnecessarily, small in the current environment. This is not how things have to be.

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