Criticism of banks 'damaging'

Relentless criticism of Irish banking could soon begin damaging international attitudes towards the sector, the group chief executive of Irish Life & Permanent plc warned yesterday.

Mr David Went said banking had been the key to the performance of the wider economy in recent years.

"With some of the criticisms I hear and read, I wonder whether they're talking about the unstable banking industry of some Third World country, or the banking industry at the heart of Europe's outstanding economy."

Mr Went, speaking in Dublin to the Institute of Bankers, said he was increasingly concerned at the level of criticism being made about the banking sector.

"My concern is that after a period of pretty relentless criticism, we're coming closer to a tipping point where the cumulative effect could begin to influence the attitude of international institutions towards the sector."

International investors were increasingly asking questions about the overall level of support for the banking industry in Ireland. He said they were very attuned to media and political criticism of the sector.

Banking had played a key role in providing credit and capital to individuals and companies across the economy. The fact that the sector employed 38,000 people - and accounted for 4.6 per cent of gross domestic product in 2002 - was illustrative of its importance to the overall economy.

He said he believed the sector had failed to get its message across.

He acknowledged that there had been a number of major controversies involving Irish banks in recent months. "There can be no place in banking or financial services for people with low standards of ethics."

"However, across the industry there is no comparison between the efforts made now on improving customer service and the practices of 20 years ago."

In relation to the Irish Financial Services Regulatory Authority, Mr Went said he was a strong supporter of the independent regulator, but that it and other consumer groups must avoid the temptation to focus on costs to the exclusion of value.

While there was a role for tables comparing the costs of various financial products, the problem was that these tables were "in danger of defining the process by which cheapest is always best".