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IBF statement on Government actions to recapitalise banks and support businesses and homeowners

The Irish Banking Federation (IBF) today welcomes the actions taken by Government to provide stability and confidence to the banking sector. IBF believes that these initiatives, to recapitalise Ireland’s two largest retail banks, will underpin the wider economy at this critical time, provide confidence to the markets and promote Ireland’s standing internationally.

IBF has worked with Government and other relevant stakeholders to develop the new Business Banking Code and the Code of Practice on Mortgage Arrears (which builds on the original IBF voluntary code) and we welcome their introduction on a statutory basis. These Codes provide an added measure of reassurance to both businesses and mortgage borrowers at this time.

In the US and across the EU we have seen a series of actions by national governments to underpin the banking sector. The Government’s actions are particularly significant given Ireland’s challenging economic environment and the continuing difficulties being experienced by the global financial system. The combined impact of the measures – for which the relevant banks will pay on a fully commercial basis – will play a hugely important role in assisting the sector to provide vital financial support to the economy in the current challenging climate.

Commenting on the Government’s announcement the Chief Executive of IBF, Pat Farrell, stated: “This action by Government is crucial in helping to provide confidence and stability to the banking sector and we very much welcome it. The causes of the current crisis are many. Internationally, we have seen continued and severe dislocation of financial markets and a drying up of liquidity. Here at home, low interest rates, a benign credit environment; economic growth which was overly dependent on consumer consumption and a rising housing market all played their part. While the causes are many, there is full acknowledgement that the sector must take its share of responsibility for the crisis.

We recognise that all stakeholders have been disappointed and, while acknowledging our shortcomings, we also have to act decisively in bringing stability to the banking sector in a way that helps to address Ireland’s broader economic challenges. Rebuilding sector stability and confidence will take time and we are fully committed to working constructively with Government, Regulators and all of our stakeholders to achieve these goals.”

IBF believes that, in addition to these confidence-boosting initiatives by Government, appropriate cross-border collective action is required – not just at EU level but globally. Working in co-operation with the EU, ECB and other international authorities, our own Government continues to develop appropriate solutions to unprecedented challenges. IBF and its members are committed to supporting Government in every way possible in this process.

The sector wishes to acknowledge and thank Government for their commitment and effort in recent months in support of the sector, given its critical importance to the economy.

Note to Journalists 
The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644

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