Donohoe publishes terms of reference for banking review
The Minister for Finance has published the terms of reference for a “broad-ranging” review into the retail banking sector, which will consider services provided by both banks and non-banks, as the latter becomes more active in the provision of SME credit and mortgage lending.
Back in July, Paschal Donohoe said his department would conduct such a review.
The terms of reference will require a review of the current retail banking landscape and likely market trends over the next decade.
It will also look at the size and structure of the sector in comparison with similar sized open economies to see what lessons can be learned.
There will also be a review of the “structural changes” stemming from fintech and digital finance, which are disrupting the traditional model.
“Retail banking has been undergoing a period of significant change over the last decade, due to difficult economic circumstances at the start of the decade and the advancements in technology and fintech in recent years,” Minister Donohoe said.
“Covid-19 and Brexit have further accelerated the rate of change.
“In this context, it is necessary and timely that we now assess how the system can best support social and economic activity for our citizens and businesses,” he added.
The terms of reference will also require a review of the implications of Covid-19 and Brexit.
Competition, consumer protection and consumer choice will also be reviewed, along with the provision of sustainable lending to the SME sector; and options to develop the mortgage market.
In a statement, the Department of Finance said the review will involve extensive consultation with stakeholders, and will include a public consultation to invite views from the public and stakeholders on the key aspects of the review.
The review team is due to present its draft report to the Minister next November.
Banking & Payments Federation Ireland (BPFI) has today welcomed the publication of the terms of reference.
“What’s needed at this stage is an honest discussion on the challenges and opportunities that banking in Ireland faces”, Brian Hayes, the chief executive of BPFI, said.
“We see this review as an opportunity to focus on the future and to learn from the past. Banking in Ireland today is entirely different to banking in Ireland a decade ago,” he said.
“While the banking sector remains the key financial intermediary for corporate, SME, personal and household investment in Ireland – it’s also a sector that operates under European Banking Union. The operating environment for Ireland’s banks should not be significantly different from the operating environment for banks in other euro zone countries,” he added.
BPFI figures show that the Irish retail banking sector employs 22,000 people, while the wider banking sector contributes €1.6 billion directly to the Exchequer, and a further €11.6 billion to the economy each year.
The sector also provides loans totaling €152 billion for Irish households and businesses, including over 822,500 mortgages to homeowners here.
John O’Connell, General Secretary of the Financial Services Union welcomed the publication of the terms of reference.
“The FSU have campaigned for the last twelve months for the establishment of a Banking Forum where all relevant stakeholders would be involved and where a structured debate on the future of Banking could take place,” he said.
“I am pleased today that the Minister for Finance has accepted our suggestion and has published terms of reference for the review.”
He added that the terms of reference are broad and cover most of what was included in the union’s proposal submitted to the Department last year.
Article Source – Donohoe publishes terms of reference for banking review – RTE
