The Government seems determined to pump €8bn in taxpayers money into banks, who wont disclose the full extent of their liabilities, arent cutting their own salaries and have got us into this mess in the first place. What confidence is there that we will get any benefit out of this money? It certainly doesnt give anyone any more confidence in the banks.
Simple solution:
The Government should ignore the existing banks and set up a new bank using the €8bn to capitalise it.
Could you imagine the impact this would have on the economy? The only bank in the developed world with loads of capital and no toxic loans on its books. It would attract depositors from all over the globe which will increase its reserves even more. It could highlight the "no toxic liabilities" slogan in its international advertising.
This bank would be easily able to lend to viable businesses in Ireland thus eliminating their cash flow problems.
The devils advocate answer to this seems to be "you cant just set up a bank, where do you get branches, staff etc......."
To start with, the Government now owns a load of Anglo Irish Branches. It can close Anglo and use the branches for this new bank. There are now a load of ready to go branches on the market from the First Active/Ulster merger. There are also a lot of vacant branches left over from the Permo TSB merger. It would not be difficult to get the physical infrastructure in place with branches in most major towns within a short space of time and at minimal cost.
All you'd need to do is find a new HQ building and staff it - and there are a lot of commercial buildings, including some the Government are already renting, vacant in Dublin.
You do a "Ryanair" with this new bank. The staff are hired on different more cost effective contracts - multitasking, less "executives", reasonable wages, less discretion to deviate from the standard products/rules. No doubt there will be a lot of staff with banking experience on the dole very soon, so you'd have a choice of who to hire. Replicate the same in the branches and HQ - no frills, no fancy furniture and offices, have most people banking online.
My opinion is that the positives associated from having a new more effective bank which is fully capitalised and insulated from the toxic debt will more than outweight the negatives of losing some of our existing banks. If an existing bank goes bust, at least we'll know that we are limited to compensating only ordinary depositers (so ordinary people will not lose their savings).
Then in 5 years time, when this is one of the biggest banks in Europe (after the rest go bust), we then sell it off at a big profit.
You cant lose with this approach.
Simple solution:
The Government should ignore the existing banks and set up a new bank using the €8bn to capitalise it.
Could you imagine the impact this would have on the economy? The only bank in the developed world with loads of capital and no toxic loans on its books. It would attract depositors from all over the globe which will increase its reserves even more. It could highlight the "no toxic liabilities" slogan in its international advertising.
This bank would be easily able to lend to viable businesses in Ireland thus eliminating their cash flow problems.
The devils advocate answer to this seems to be "you cant just set up a bank, where do you get branches, staff etc......."
To start with, the Government now owns a load of Anglo Irish Branches. It can close Anglo and use the branches for this new bank. There are now a load of ready to go branches on the market from the First Active/Ulster merger. There are also a lot of vacant branches left over from the Permo TSB merger. It would not be difficult to get the physical infrastructure in place with branches in most major towns within a short space of time and at minimal cost.
All you'd need to do is find a new HQ building and staff it - and there are a lot of commercial buildings, including some the Government are already renting, vacant in Dublin.
You do a "Ryanair" with this new bank. The staff are hired on different more cost effective contracts - multitasking, less "executives", reasonable wages, less discretion to deviate from the standard products/rules. No doubt there will be a lot of staff with banking experience on the dole very soon, so you'd have a choice of who to hire. Replicate the same in the branches and HQ - no frills, no fancy furniture and offices, have most people banking online.
My opinion is that the positives associated from having a new more effective bank which is fully capitalised and insulated from the toxic debt will more than outweight the negatives of losing some of our existing banks. If an existing bank goes bust, at least we'll know that we are limited to compensating only ordinary depositers (so ordinary people will not lose their savings).
Then in 5 years time, when this is one of the biggest banks in Europe (after the rest go bust), we then sell it off at a big profit.
You cant lose with this approach.