Economy

Minister defends handling of AIB cash withdrawal plan

The Minister for Finance has defended his and his department’s handing of the decision by AIB to end cash services in 70 branches around the country in July.

Paschal Donohoe told the Oireachtas finance committee that the Department of Finance was first made aware of the plan through a pack of papers prepared for the bank’s board of directors that was given to the department on June 29th.

Mr Donohoe said an official was made aware of the plan on Friday July 1 and officials then met with the bank on Friday July 15th at which the matter was discussed.

The minister said he only became aware of it on Tuesday July 19th.

That was the same day that AIB made the announcement to the public, before it was forced to reverse course four days later on Friday July 22, following an outcry.

In at times testy exchanges with Sinn Féin’s finance spokesman, Pearse Doherty, Mr Donohoe said it wasn’t apparent to the official or the department through the papers shared with it what the impact would be on the public or the reaction to it.

“We only became aware of the full scale of what was proposed at official level the Friday before the announcement was made,” he said.

Mr Donohoe added that the withdrawal of cash services was just one matter contained in the board pack, which ran to many hundreds of pages.

“Either your official didn’t read that, or didn’t understand the significance of that, but you were informed of this issue at that point in time, along with many other issues that were coming before the board,” Mr Doherty stated.

“The board pack is sent to you because you are the majority shareholder. It is part of the relationship framework, it is for you then to exercise the right under that framework to raise issues if it would be deemed necessary.”

Mr Donohoe accused Mr Doherty of trying to establish “some kind of narrative” that he was aware of this all along and in some way is concealing information from the committee.

“Nothing could be further from the truth,” Mr Donohoe added.

Mr Doherty said he was not suggesting that Mr Donohoe knew what was happening but rather was questioning why he hadn’t been told.

“If I were the Minister for Finance, an official was told by AIB we are going to withdraw cash services from 70 branches, and he was informed of that before the meeting and didn’t tell me as minister, I’d would have an issue in terms of how that department is being run,” Mr Doherty claimed.

The Sinn Féin TD also asked the minister whether he thought the debacle had caused reputational damage to the bank.

Mr Donohoe said that was a matter for AIB itself, but it did provoke a significant reaction from the public that should have been anticipated and was reversed within a number of days.

However, Mr Doherty said the issue of reputation was important because if Mr Donohoe had believed the plan would cause reputational impact on the bank, under the relationship framework it would mean that the minister would have to be consulted.

“This did cause this,” he said.

“You could have actually stepped in here, you should have stepped in here, because under the relationship framework, you had the ability to do that.”

But Mr Donohoe added that the framework requires ministerial consultation if an issue is likely to create clear and significant reputational issues for the bank, the minister or the State and is outside of the ordinary course of business.

“Even though I am very glad that the decision was reversed, it is clearly the case that a bank’s assessment of whether a cash service should be made available in different branches is firmly inside the ordinary course of business of the bank,” he claimed.

However, Mr Doherty challenged that claim, saying other jurisdictions are bringing forward legislation to protect cash services in banks.

Mr Donohoe said he does not get involved in commercial decisions of the bank because of the framework, and as a result he did not call the CEO of the bank, Colin Hunt, though he did instruct his department to do so after the decision had been announced.

He said in that call, the commercial decision of the bank was acknowledged by the department, but the bank was also made fully aware of the public reaction to it.

“You actually could have done more, you should have done more,” Mr Doherty stated in response, comparing Mr Donohoe’s actions to those of the Taoiseach who had publicly called on the bank to reverse the decision and sought a meeting with bank officials.

“Whatever I did or never do, is never going to be enough for you,” Mr Donohoe said.

“Some day you might surprise me,” Mr Doherty retorted.

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