CHANGES IN personnel at the top of the Irish banks and the regulatory system are on the way in the new year, Minister for Communications Eamon Ryan forecast last night.
The Green Party Minister said a new culture of management in the regulatory system, the Central Bank and the commercial banks was now urgently required."
The status quo cannot be allowed to continue in terms of personnel. Clear lessons have to be learned and those responsible for the current state of Irish banking will have to allow a different system and different personnel to be put in place," said Mr Ryan.
The Minister said the Green Party had been fully engaged in banking reform which had first involved the introduction of the guarantee scheme and then the recapitalisation of the main banks: "There has to be a clear signal to the shareholders, who are now the taxpayers, so that they can have confidence in the system."
Mr Ryan said the whole system of pay and bonuses in the banks, which had seen those at the top earn 100 times more than those at the bottom, would also have to change because it had encouraged bad lending practices.
"It is appropriate that the Government has not rushed through necessary reforms, but the process is one that will have to deliver fundamental changes in terms of values, practices and personnel. The public will see this happen in the new year."
Mr Ryan added there may be a misconceived sense the Government had rescued the banks.
"That is not the Government's approach. The banks are not getting a soft, easy deal from the Government. There will not be a continuation of the current system, but root-and-branch reform which will be better for banking and better for the economy."
The Minister added a new confidence in the Irish banking system would have to be instilled at home and internationally.
"What we have to get out of it is a new banking system that has learned from the mistakes of the past 15-20 years. We will have to see a different culture of lending that is based on the real needs of the economy."
Mr Ryan said the programme for an innovative and green economy announced last week required a banking system based on real values.
The governor of the Central Bank, John Hurley, said yesterday the Government's recapitalisation of the banks involved an agreement to boost lending to small and medium businesses as well as more funds for first-time homebuyers and assistance with mortgage arrears.
"The commitments given by the banks to the Minister for Finance are clear. They are clear in relation to lending to the small and medium business sector. They are clear in relation to first-time buyers and mortgages," he said. "We do need to stabilise our financial system and our banks and to give confidence that our financial system is capable of supporting the real economy, and that is in train," he told RTÉ News.
Mr Hurley said the Irish economy would contract significantly next year, along with the entire euro-zone economy. "The euro economy is contracting and will contract next year. We have also seen in the euro area inflation reduce and it's expected to reduce even further. These are issues that will have to be considered very carefully by the Governing Council in the coming months," he said. "While we don't pre-commit in relation to interest rates, it's absolutely clear that we are monitoring these developments very, very closely," Mr Hurley told RTÉ.
Taoiseach Brian Cowen again stressed the seriousness of the economic crisis during an interview on the Gerry Ryan Showon RTÉ yesterday.
"We are now going to face into a few years where the standard of living will drop. We have a problem. It is a serious problem. Unemployment will go up in the short term, that's for sure," he said.
Mr Cowen said there had been a "fundamental fracture" of the worldwide financial system. But he added that, if the right things were done now, Ireland could get back to its previous position reasonably quickly. He said the social partnership model was "the right model, a problem-solving model" to achieve that objective.
