By Carmel Crimmins
DUBLIN, Feb 28 (Reuters) - Ireland's Prime Minister unveiled on Saturday an overhaul of the financial services landscape to try and restore the country's international reputation and his own popularity.
A string of banking scandals and the bursting of a local property bubble have undermined Ireland's credibility as a financial services centre and triggered widespread public resentment at the use of taxpayer funds to bail out lenders.
'There is huge anger and disgust out there at the way some of our bankers behaved,' Brian Cowen said in a keynote speech at his party's convention.
'What we need to do now is fix the damage they have caused.'
Scandals surrounding nationalised lender Anglo Irish Bank have created an impression of a cosy corporate culture and lax regulatory regime.
Highlighting that criticism, Cowen said he would bring the responsibilities of the central bank and financial regulator under one roof in a new Central Banking Commission, based on a Canadian model.
Cowen vowed that this Commission would have new powers and an internationally-respected head of banking regulation.
'In the weeks ahead, I will introduce new standards of banking regulation and new standards of corporate governance, which will restore our reputation and move us to the forefront of best international practice,' he said in a televised address.
To loud applause, Cowen said chief executives of any banks receiving state aid would face a salary cap.
URGENT WORK
Ireland is expected to unveil a plan to tackle banks' exposure to risky commercial property loans after its 7 billion euro ($8.87 billion) recapitalisation package for the top two lenders was sidelined by the scandals at Anglo Irish.
'We are now looking at the issue of how we can minimise risk in relation to that,' Finance Minister Brian Lenihan told Reuters on the sidelines of the convention. 'It is urgent work.'
He declined to give a timeframe for a decision or outline his favoured option.
Investors are waiting to see whether Dublin will follow up a programme to inject 3.5 billion euros into each of Bank of Ireland and Allied Irish Banks with a possible UK-style insurance scheme for their bad debts or the establishment of a 'bad bank' to ring-fence soured assets.
AIB and Bank of Ireland have nearly doubled their provisions for bad debts, mostly related to loans to property developers, and investors fear there may be more shocks in store.
A poll in Saturday's Irish Independent newspaper showed that 84 percent of the public are dissatisfied with the government's handling of the banking crisis.
SUPPORT OF ECB
Dublin's bailout of the banking sector comes at a time of unprecedented pain for the wider economy, with Ireland heading into its worst recession on record this year.
With the loss of crucial property-related taxes, the government is facing a budget deficit of 9.5 percent of gross domestic product this year, the worst shortfall in the euro zone, and that is after 2 billion euros worth of spending cuts.
Cutbacks this year, including a pension levy on public sector workers, have sent government approval ratings to record lows, triggered a one-day strike by thousands of civil servants and prompted 100,000 people to protest last weekend.
But Cowen signalled on Saturday that he was going to push ahead with more tax increases and spending cuts as he seeks to reassure Brussels and ratings agencies that he is tackling the budget shortfall.
In another nod to European partners and a referendum later this year on the European Union's reform treaty, Cowen reminded delegates that the eurozone was an economic harbour for Ireland.
'We could never have contended with this financial crisis if we were not a member of the euro zone and if we did not have the support of the European Central Bank.'
(Reporting by Carmel Crimmins; Editing by Ruth Pitchford and Ralph Boulton) ($1=.7889 Euro) Keywords: IRELAND ECONOMY/ (carmel.crimmins@reuters.com; Reuters Messaging: carmel.crimmins.reuters.com@reuters.net; +353 1 500 1529) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
DUBLIN, Feb 28 (Reuters) - Ireland's Prime Minister unveiled on Saturday an overhaul of the financial services landscape to try and restore the country's international reputation and his own popularity.
A string of banking scandals and the bursting of a local property bubble have undermined Ireland's credibility as a financial services centre and triggered widespread public resentment at the use of taxpayer funds to bail out lenders.
'There is huge anger and disgust out there at the way some of our bankers behaved,' Brian Cowen said in a keynote speech at his party's convention.
'What we need to do now is fix the damage they have caused.'
Scandals surrounding nationalised lender Anglo Irish Bank have created an impression of a cosy corporate culture and lax regulatory regime.
Highlighting that criticism, Cowen said he would bring the responsibilities of the central bank and financial regulator under one roof in a new Central Banking Commission, based on a Canadian model.
Cowen vowed that this Commission would have new powers and an internationally-respected head of banking regulation.
'In the weeks ahead, I will introduce new standards of banking regulation and new standards of corporate governance, which will restore our reputation and move us to the forefront of best international practice,' he said in a televised address.
To loud applause, Cowen said chief executives of any banks receiving state aid would face a salary cap.
URGENT WORK
Ireland is expected to unveil a plan to tackle banks' exposure to risky commercial property loans after its 7 billion euro ($8.87 billion) recapitalisation package for the top two lenders was sidelined by the scandals at Anglo Irish.
'We are now looking at the issue of how we can minimise risk in relation to that,' Finance Minister Brian Lenihan told Reuters on the sidelines of the convention. 'It is urgent work.'
He declined to give a timeframe for a decision or outline his favoured option.
Investors are waiting to see whether Dublin will follow up a programme to inject 3.5 billion euros into each of Bank of Ireland and Allied Irish Banks with a possible UK-style insurance scheme for their bad debts or the establishment of a 'bad bank' to ring-fence soured assets.
AIB and Bank of Ireland have nearly doubled their provisions for bad debts, mostly related to loans to property developers, and investors fear there may be more shocks in store.
A poll in Saturday's Irish Independent newspaper showed that 84 percent of the public are dissatisfied with the government's handling of the banking crisis.
SUPPORT OF ECB
Dublin's bailout of the banking sector comes at a time of unprecedented pain for the wider economy, with Ireland heading into its worst recession on record this year.
With the loss of crucial property-related taxes, the government is facing a budget deficit of 9.5 percent of gross domestic product this year, the worst shortfall in the euro zone, and that is after 2 billion euros worth of spending cuts.
Cutbacks this year, including a pension levy on public sector workers, have sent government approval ratings to record lows, triggered a one-day strike by thousands of civil servants and prompted 100,000 people to protest last weekend.
But Cowen signalled on Saturday that he was going to push ahead with more tax increases and spending cuts as he seeks to reassure Brussels and ratings agencies that he is tackling the budget shortfall.
In another nod to European partners and a referendum later this year on the European Union's reform treaty, Cowen reminded delegates that the eurozone was an economic harbour for Ireland.
'We could never have contended with this financial crisis if we were not a member of the euro zone and if we did not have the support of the European Central Bank.'
(Reporting by Carmel Crimmins; Editing by Ruth Pitchford and Ralph Boulton) ($1=.7889 Euro) Keywords: IRELAND ECONOMY/ (carmel.crimmins@reuters.com; Reuters Messaging: carmel.crimmins.reuters.com@reuters.net; +353 1 500 1529) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.