MINISTER FOR Finance Brian Lenihan has warned that excessive remuneration packages which reward short-term performance and unwarranted risk taking in banking, would have to be "stamped out".
Calling for a return to "traditional banking values", he also insisted that there would be "no tolerance for any institution which seeks to exploit competitive advantage" from the State's guarantee.
The Minister added that "we're going in very deep into the banking system and we have to ensure that the taxpayer is protected in relation to that intervention".
He said a scheme laying out the charges and conditions would be introduced in the House next week.
As he revealed that the Ulster Bank had applied to be included among the institutions covered by the proposed guarantee scheme, he said certain other institutions "are within the scope of this legislation".
However, including other institutions in the State's guarantee system would have an impact on the assets and liabilities covering the six institutions included in the guarantee, the Minister said.
He pointed out that the six domestic financial institutions would be "orphans in the storm" in the international arena, because they did not have any other state related to them.
In the Dáil last night he said there would be no large remuneration packages for senior personnel in credit institutions covered by the Government's emergency legislation.
Mr Lenihan acknowledged that a matter of great concern to many of his colleagues, at European finance ministers' level, were the "excessive remuneration approaches which reward short-term performance and excessive risk-taking".
He added: "We will have to insist that those practices are stamped out in these credit institutions. There is a need for a return to traditional banking values in all our credit institutions." He added that there was a need to ensure responsible and prudent lending practices in respect of consumer lending. However, our consumer lending, as a proportion of personal lending, was low by inter-national standards.
Mr Lenihan said there should be "individuals with a public interest perspective" on the boards of the credit institutions.
"Good progress has been reported to me, and I expect following the enactment of this Bill, a scheme would be laid before the House early next week at the latest," he added.
The scheme, said Mr Lenihan, would set out the basis on which charges would be levied on the credit institutions involved, the revenue expected to be raised from the exchequer, and the conditions under which the guarantee would be granted under the legislation.
Mr Lenihan said he had been advised by the Attorney General that the Bill was constitutional.
He also said the Ulster Bank "has made an application and the Government will give careful and sympathetic consideration to that application, but I cannot prejudge any decision that might be made in that matter".
Outlining the overall figures for the six institutions, he said the National Treasury Management Agency estimated that the guaranteed liabilities of the six institutions were estimated at €440 billion and assets at €520 billion, "which means assets exceed by €80 billion".
"Were we to include some of these entities it would have an impact on that assets and liabilities' equation and that has to be taken into account by the Government, because these institutions have parent companies in other jurisdictions."
