Public trust in the banks is in short supply, to put it mildly, which makes Permanent TSB’s economy with the truth over the outcome of its Central Bank balance sheet assessment all the more hard to fathom. How a bank that has hung its hat on a return to prudential banking values can reconcile its new mission with an, at best, misleading statement two weeks ago is anyone’s guess.

Customers who took the bank’s statement at face value then would have formed the impression, erroneously, that the Central Bank did not want it to make extra provisions for bad loans. In fact the opposite was the case, as the bank belatedly admitted yesterday, although it refused to say how big a provision the Central Bank was seeking.

It would look as though the banking standards that Permanent TSB really harks back to are those of 2008 when refusing to disclose bad debts was the order to the day. The bank’s decision to play ducks and drakes has now queered the pitch for AIB. The only safe assumption to make about AIB’s refusal to comment on what the Central Bank told it about provisions is to assume that it too has been told to make bigger provisions.

Bank of Ireland is of course the winner, appearing the model of transparency
by comparison. Cynics may argue that it would have been equally coy had it not planned to tap the markets a few days later.

The whole affair raises many questions about what has changed or not changed when it comes to the culture of banking in Ireland. It also raises the question of whether or not the Government, which owns both Permanent TSB and AIB, has agreed to the non-disclosure. If it was done with an eye to not scaring the bond market horses, it has surely backfired.

They will take two things from all this. One is that Irish banks still have a problem with disclosure; the second is that two banks could have holes in their balance sheets that scare the the Government.