CALLING on the Government to encourage competition in banking, Mr Feargal Quinn (Ind), declared that retail banking in Ireland was dominated "by a virtual duopoly of the two biggest banks, the Bank of Ireland and Allied Irish Banks".
In a private member's motion, Mr Quinn said that the State should let the market create a third banking force. The motion, he added, was essentially about competition.
"I believe in competition as the main engine of business growth. I believe that competition is the most effective item we have in our tool box to stimulate an efficient business economy that delivers what customers need."
He warned that the market was changing rapidly and dramatically and he was not as convinced as the Government appeared to be that the Competition Authority and the Central Bank would be able to deal with the new situation.
Showing how the Irish banking customer suffers from the existing situation, Mr Quinn said:
"The gross margin is the difference between what, on average, banks pay to borrow money and what, on average, they earn by lending it out.
"In Ireland, that gross margin is much higher than it is in the UK. In Ireland, that gross margin is much higher than it is in the US.
"I picked these two comparisons because those are markets that the Irish banks have themselves been players in. When they operate in these countries, they have to accept a far lower gross margin than they are able to impose on their Irish customers."
Seconding the motion, Prof Joe Lee (Ind) said the logic of the presentation of Mr Quinn's motion appealed to him. We did not have sufficient competition in this country in any area - whether it was banking or academic life.
Mr Joe Sherlock (DL) expressed his regret that moves to establish a third banking force were not further advanced and he pointed out that developments such as the Consumer Credit Bill and the forthcoming Credit Union Bill would help create a positive climate for the development of a State policy on banking.
Replying, the Minister for Finance, Mr Quinn, said that throughout the life of this Government the issue of the future structure of the State banking sector, including TSB Bank, had been under continuous consideration, because the Government wished to facilitate the State banks so that they could maximise their impact on Irish economic development as well as their own business success. The options continued to be examined.
Mr Frank Fahey, Fianna Fail spokesman on Enterprise and Employment, said he was extremely disappointed with the Minister's speech. The debate showed that there was an urgent need for a competitive edge in the banking market. Instead, the Minister had just spoken about the Competition Authority or the development of European currency.
Earlier, Mr Fahey quoted the Government's Programme for Renewal in which it stated its commitment to a "vigorous third force in banking".
This commitment appeared to have disappeared into the rainbow oblivion with regular media reports that the third banking force was on or off.
The debate concluded.
. The second stage of the Trade Marks Bill, 1995, was passed.
The House adjourned until 10.30 this morning.