Then taoiseach Albert Reynolds was accused of “anti-bank sentiment” after he criticised the banks for their perceived lack of support for small business.
Files released under the 30-year rule by the National Archives show Reynolds received a lukewarm response from the banks over his efforts to establish a regular forum for discussions between the government and banking representatives.
As a self-made businessman, Reynolds was frequently critical of the banks accusing them of excessive profitability and of not passing on interest rate reductions to customers.
He told them that they needed to do more for small and medium enterprises (SMEs) especially as their profits had increased fourfold from IR£100 million in 1990 to IR400 million in 1993.
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The taoiseach noted the large extent of criticism of the banks by representative bodies for small business and told the bankers that there was a perception that too many people were being refused finance and the cost of finance to small business was too high.
Documents show Bank of Ireland chairman, Howard Kilroy, expressed deep concern in May 1994 over the tone and content of the taoiseach’s remarks on banks’ lending to small business.
Mr Kilroy claimed the charges made by Mr Reynolds were not “warranted or accurate”.
The banker expressed regret that the taoiseach’s comments coincided with Bank of Ireland’s annual results which he claimed meant they had gained a level of international exposure for “anti-bank sentiment in Ireland”.
Other records of meetings between government ministers and officials and the heads of the country’s main banks in 1994 show bankers felt aggrieved at criticism by the government which they believed was undeserved.
They were particularly annoyed that such criticism reinforced the public’s misguided impression that the banks were a homogenous group.
Records show bankers were concerned about the high-profile nature of the debate between the parties and the unfair damage they claimed it was causing their image.
They claimed they were effectively being asked by the government to take uncommercial decisions in relation to small-medium enterprises (SMEs)
Bank of Ireland chief executive Pat Molloy expressed strong reservations about participating in a forum with other banks and recommended instead a series of meetings with individual banks.
In a letter to the taoiseach in advance of the proposed forum, Mr Molloy said Bank of Ireland regarded its lending policy and practice as a competitive issue which would make open discussion in the presence of other banks impossible.
He claimed participation in the forum “perpetuates the view that the banks act in concert with one another – a view which has no basis and which we are anxious to dispel”.
The Irish Bankers’ Federation indicated they were anxious that the forum would provide occasions where detailed policies were endorsed and would not to be used “for public speeches which would reflect badly on their practises”.
A senior Department of Finance official said it was “unacceptable” for the banks to be laying down preconditions for discussions when those conditions involved the key matter of interest to the government.