Donohoe publishes terms of reference for banking review

The finance minister has released the terms of reference for a “broad” review of the retail banking sector, which will examine the services provided by both banks and non-banks, as the latter become more active in the offer of credit to SMEs and mortgage loans.

In July, Paschal Donohoe said his ministry 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 relative to similarly sized open economies to see what lessons can be learned.

It will also take stock of the “structural changes” resulting from fintech and digital finance, which are shaking up the traditional model.

“Retail banking has undergone a period of significant change over the past decade, due to difficult economic circumstances at the start of the decade and advances in technology and fintech in recent years,” said Minister Donohoe.

“Covid-19 and Brexit have further accelerated the pace of change.

“In this context, it is necessary and timely that we now assess how the system can best support the social and economic activity of 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 examined, as well as the provision of sustainable loans to the SME sector; and options for developing the mortgage market.

In a statement, the finance ministry said the review will involve extensive stakeholder consultation and include a public consultation to solicit views from the public and stakeholders on key aspects of the review.

The review team is due to present its draft report to the Minister in November.

The Banking & Payments Federation Ireland (BPFI) today welcomed the publication of the terms of reference.

“What is needed at this point is an honest discussion of the challenges and opportunities facing the banking industry in Ireland,” said Brian Hayes, Managing Director of BPFI.

“We see this review as an opportunity to focus on the future and learn from the past. Banking in Ireland today is totally different from banking in Ireland ten years ago,” he said. -he declares.

“Although the banking sector remains the main financial intermediary for investment by businesses, SMEs, individuals and households in Ireland, it is also a sector that operates within the framework of the European Banking Union. The operating environment for Irish banks is not expected to be much different from that of banks. in other euro area countries, “he added.

BPFI figures show Ireland’s retail banking sector employs 22,000 people, while the broader banking sector pays 1.6 billion euros directly to the Exchequer and an additional 11.6 billion euros to economy every year.

The industry also provides loans totaling € 152 billion to Irish households and businesses, including more than 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 has campaigned over the past twelve months for the creation 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. declared.

“I am pleased today that the Minister of Finance accepted our suggestion and published the 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 ministry last year.

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