Banker lashes out at critics of bank profits

Prominent banker, Mr Willie Slattery, has launched a stinging attack on commentators who criticise the large profits made by Irish banks, claiming that "strong profitable banks" are good for both the economy and employment.

He has also attacked the Government for imposing a €300 million levy on banks over the next three years.

Mr Slattery, who chairs the banking industry association, Financial Services Ireland, and works for IFSC company, State Street, described much of the criticism of the banking sector as "envious".

He said that the "enormous increase in private-sector investment that occurred throughout the period of the Celtic Tiger" had only been possible because of banks' profitability.

"Banks that are not adequately profitable are the first to curtail their lending activities, as is happening in the German economy currently," Mr Slattery said.

"Strong profitable banks are good for our economy and for employment. Commentators often overlook this fact," he added.

Addressing the Financial Services Ireland annual lunch, Mr Slattery went on to attack the imposition of the €300 million levy on financial institutions, first announced by the Minister for Finance, Mr McCreevy, on budget day last December.

He said the "tax" had sent a negative signal to international markets about the Government's attitude to financial services in the Republic.

The public sector must also, according to Mr Slattery, take responsibility for its effect on the competitiveness of the financial services sector. He called for reform of the current system whereby new financial products must be approved by regulators before being sold to the public.

"I do not believe that the substance of the bank levy, or the manner of its introduction, or any of the other levies targeted at the sector in the budget, represent a constructive and responsible approach," Mr Slattery said.

He warned that additional costs for banks would ultimately affect the cost of banking services for consumers. "It might be popular in some circles to impose levies on the banking sector, but, in the long term, it is not in the public's interest," he said.

Mr Slattery did not limit his energetic defence of the financial services sector to banks, choosing also to claim that "our appalling high insurance costs" were due to problems "beyond the control of insurance companies".

He said "a compensation culture, ambiguous attitudes to fraud, a less-than-efficient legal system and disproportionately high legal costs" had conspired to create a dysfunctional insurance environment".

"Much could be achieved to resolve these difficulties if effective reform could be introduced in the legal process for resolving insurance claims," Mr Slattery said.