Committee Reports::Report No. 11 - Industrial Credit Company, Limited::12 March, 1980::MIONTUAIRISC NA FINNEACHTA / Minutes of Evidence


(Minutes of Evidence)

Dé Céadaoin, 12 Márta, 1980

Wednesday, 12 March, 1980

Members Present:

SENATOR EOIN RYAN in the chair


Barry Desmond,


Patrick M. Cooney,

James N. Fitzsimons,

Justin Keating.

William Kenneally,



William O’Brien,




Mr. J. G. Hickey, Chairman; Mr. F. A. Casey, Managing Director; Mr. L. J. Heelan, General Manager; and Mr. J. C. Ryan, General Manager of the Industrial Credit Company, Limited called and examined.

Chairman.—Gentlemen, the procedure is that Members of the Committee will direct their questions to your Chairman, Mr. Hickey, who can either deal with them himself or pass them on to any member of his team, if he feels like doing so. We are now on tape. Sometimes it does not work completely effectively, so I would ask everybody to speak up. Is there any preliminary statement you wanted to make?

Mr. Hickey.—I am not certain what is the custom.

Chairman.—It is not necessary; sometimes it is done; there is no necessity; certainly you have given us plenty of documentation.*

Mr. Hickey.—I will not make any statement. I had a brief statement but it does not say anything more than is contained in submission material, just places emphasis on a few points.

Chairman.—Perhaps, you would like to keep that for answering, it may fit into answers if you would prefer to do that.

Mr. Hickey.—I will not make any statement.

1. Chairman.—Perhaps I might open the proceedings by asking to what extent the ICC has met its original objective of encouraging the public to invest in Irish enterprise through share purchase on the stock exchange. Do you feel that this, which was one of your primary objectives, is still of any importance, or has it outlived its usefulness?

Mr. Hickey.—No, we feel it is certainly still of importance. Unfortunately, the stock market has not had any major public issues in recent years; that was for reasons that were not connected with our functions as a development bank. Certainly we still want to avail of any opportunity to bring any companies that were prepared to go public to the stock exchange and to assist them in every way to obtain a quotation. We certainly would regard it as a major part of our function. We have a list—if the Committee would like to see it—of all the companies which we brought to the Stock Exchange since the foundation of the company. It is a formidable list and contains many of the best known names in Irish industry brought originally to the stock exchange by the ICC.*

Mr. Casey.—I might just add some figures. Over the years we have sponsored 84 public issues. That is approximately 50 per cent of issues by industrial companies on the Dublin Stock Exchange since we were founded. The fact that there have been very few issues in recent years is due to a number of factors like high personal taxation, the severity of stock exchange regulations, the fear of takeovers, and the alternative uses for money. In recent times interest rates have been very high and people have found it preferable to put their money on deposit than to go into shares.

2. Chairman.—Your terms of reference have been altered somewhat over the years by succeeding Acts. Is not that so?

Mr. Hickey.—Yes.

3. Chairman.—Do you feel that these amendments of your terms of reference have been sufficient to enable you to do what you think is necessary at present? Do you feel in any way restricted with your present terms of reference?

Mr. Hickey.—I do not think so. I think we can fulfil all functions that we feel are necessary in the context within which we operate. Of course it will be appreciated that we operate only on a purely commercial level; we do not make any advances for personal expenditure of any kind. Our main purpose is the provision of loans and services for industry and business. Then in the seventies we entered some other areas such as tourism and property development on a limited scale.

4. Senator Cooney.—You are starting to service small businesses to a considerably greater extent than in the past?

Mr. Hickey.—We always have but it has become more emphasised perhaps in recent years because there has been a greater growth of small businesses themselves.

5. Senator Cooney.—In connection with that, is your service restricted to the giving of money, or do you provide any other services, by way of management assistance or advice generally on the operation of these small businesses some of which might be comparatively unsophisticated?

Mr. Hickey.—Oh, certainly. We endeavour to provide them with every service we possibly can. We endeavour to make suggestions—if we think the suggestion should be made—as to ways in which they could conduct their business more profitably or more efficiently.

Mr. Casey.—We do not have a formalised consultancy service for small business. Our staff are well experienced professionals who help out in the preparation of propositions and also in the subsequent monitoring. It is not just a monitoring, from a finance house point of view; it is to help people to monitor their own affairs. But where formal consultancy is required, we steer them towards the Irish Productivity Centre and sometimes private consultants.

6. Senator Cooney.—When the ACC were with us, they indicated that part of the tone of their relationship with the agricultural sector was, that when any of their customers got into difficulties they might not apply the harsh—which may be an unfair word to use—criteria of the commercial banks in dealing with such people. What is your general philosophy if any of your customers get into trouble?

Mr. Hickey.—I would think that we would certainly try to facilitate them in every way we could. The category is somewhat different; agriculture is a very different thing from most industries. The industries would be set in a rather different environment and keeping much more careful accounts. The ACC deal in a social area very different from the social area in which we deal. While perhaps we apply more exact financial criteria in looking at troubled companies, we would still like to show that the quality of mercy was available.

7. Deputy W. O’Brien.—Has the geographical position of an industry any bearing on an application?

Mr. Hickey.—Not really, it is a question of viability.

8. Deputy W. O’Brien.—A rural industry gets the same type of——?

Mr. Hickey.—Oh indeed, because we deal with so much very small industry, a lot of it is based in more remote areas.

Mr. Casey.—And, although we do not have a complex branch network like the ACC, we have two branch offices, one in Cork and one in Limerick. To complement the service in the regional areas, we have teams based in the Dublin office, who have specific areas to look after. Therefore, there is, in effect, a total regionalisation of our services from the Dublin office, to the extent that it is not done in the branch offices.

9. Chairman.—To use a legal term, do they go on circuit every now and again?

Mr. Casey.—Yes, we make a point of letting people know that we are prepared to call on them. They do not have to travel to Dublin from Donegal or other far away places. We visit them.

10. Chairman.—Do you expect to open a few more offices?

Mr. Casey.—It is there as part of our long-term strategy. We have a rule in connection with branch offices in that we like to have the expectation that they would pay their way before we open them. We do not open branch offices for the sake of it. If they are capable of generating enough business to pay their way we will open one. That is one of our self-imposed constraints, but we certainly are, in principle, committed to the idea of opening more branches as and when the need arises.

Mr. Hickey.—We have once or twice looked at the possibility of opening branches in the west but it has not been absolutely necessary as yet.

11. Chairman.—The ACC seem to consider the taking of deposits to be almost as important a reason for opening an office as actually providing credit facilities?

Mr. Hickey.—Yes.

12. Chairman.—They gave the instance of opening their office in Westmoreland Street which seemed to be a peculiar thing for the Agricultural Credit Corporation to do but they said it proved well worth their while.

Mr. Hickey.—It is fair to say that they deal much more in small deposits than we do—we deal in minimum deposits of £1,000.

Mr. Ryan.—Obviously the ACC have done a very impressive job in relation to the arranging of deposits. Our particular financial needs are somewhat different. Our approach is conditioned by the absence of an extensive branch network. As the Chairman said, when we are deciding to open branches we look at it totally and one of the factors we would look at is if it would enable us to provide a better service to depositors particularly smaller depositors. Taken over all, having regard to commercial considerations and various other factors we have come out with a minimum deposit figure of £1,000. Obviously that brings with it some economies in providing a service to depositors.

13. Senator Keating.—When one considers the whole economic and industrial climate over the last five years, to what extent have you become involved and to what extent are you a source of working capital as distinct from capital for new investment? What is your policy on that?

Mr. Hickey.—Virtually every application we look at, which is usually for expansion of an existing industry, contains a working capital requirement as part of its needs. We deal with that on the ordinary basis. We have no inhibition against providing working capital.

Mr. Casey.—We distinguish between hard core and seasonal working capital. In the normal course we do not do the sort of working capital which is provided by bank overdraft. Where it is hard core or an essential part of the long term financing of a business we will look at it. That is not to say that we never provide seasonal finance. For example, if a customer with a large export order wanted three months’ finance in order to carry it out and, if he had fully pledged his assets to us and could not get a facility from his bank, naturally we would help out.

14. Senator Keating.—Even in circumstances where there was no fixed capital investment at that time?

Mr. Casey.—We would look at it if it was hard core.

15. Senator Cooney.—What proportion of your funds are raised from deposits?

Mr. Casey.—It is quite substantial. At the last balance sheet it was £54 million out of approximately £160 million.

Mr. Ryan.—About 35 per cent.

16. Chairman.—Do you expect it to increase more as a proportion of your funds?

Mr. Hickey.—Yes that is our policy. The policy that we have adopted and which the Department of Finance has asked us to adopt is one of reducing our dependence on support from the State. Obviously an increase in the deposit base would be a major factor in reducing our dependence on the Exchequer. We have reduced it considerably over the last decade.

17. Deputy B. Desmond.—In the late thirties general policy was to get the public to invest in Irish industry through the ICC. How successful has that policy been?

Mr. Hickey.—Originally the public invested substantially in Irish industry but with the way things have gone in recent years institutions have taken over to a great extent in equity investment in the UK and here. The public percentage of total investment on the stock exchange has declined substantially but that has nothing to do with the ICC. To me it is simply a question of what is a good investment in inflationary conditions, particularly with very high interest rates. It is very difficult to get people to see beyond a good building society or deposit account return and take a chance on equities with a much lower yield on which they often have to pay a greater amount of tax than they would on something like a building society deposit.

Mr. Casey.—We brought a lot of companies to the market that might not otherwise have come and therefore provided opportunities for Irish investors to get involved in them. In successful companies like Cement Roadstone although there are institutional holdings, there are large private shareholding in them also. They were originally quite small. Cement was always fairly large. Roadstone was really a family type business originally which gradually developed.

Mr. Hickey.—Companies like Cement Roadstone have a policy that they want as many small investors as possible. They want to broaden their investment base. We encouraged them very much. It is not to any company’s advantage to have just a few very big institutional investors.

18. Deputy B. Desmond.—You have invested very substantially on the ship construction side. In your last annual report there is a figure of 16.2 per cent for ship construction. Simultaneously you are in what one might call a relatively less profitable area, that of distributive trades. There is a figure of 20 per cent for that. Does it appear, superficially at any rate, that the investment pattern is concentrated in those two areas and how profitable are they? What sort of criteria do you have when you put 20 per cent into distributive trades?

Mr. Hickey.—The figures for the Shipping Finance Corporation distort everything. The amount of finance required for even a relatively small ship is so enormous compared with finance required for almost anything else that the figures have a distorting effect. A ship can cost £8 million to £10 million; it can be very much more. Even if we finance one ship a year it throws the other figures out of proportion. Too much significance should not be attached to the amount that we put into shipbuilding. It is a Government activity. Certain ships are required and the finance is channelled through Shipping Finance Corporation.

Mr. Casey.—As to the distributive trades, we originally went into the distributive sector because the NIEC—the predecessor of NESC—brought out a report about 1967 which said that it was a great pity that there was no organisation providing any long-term capital for the distributive trade, that manufacturing industry and agriculture were well looked after but the distributive trade was not. We responded to that by setting up “finance for a distribution” programme. It has been very successful—as can be seen in terms of volume of business done because it is reflected here in nearly 20 per cent of our resources—but it is not particularly low yielding. We make loans to the distributive trade on commercial terms, as commercial as we would to industry. It is a service that was needed, which NIEC believed to be needed and which our subsequent activities have demonstrated was needed.

Mr. Hickey.—It is worth adding that a lot of new jobs created in recent years have been in the distributive and services sectors.

Mr. Casey.—Yes, there is a rough 1:1 correlation between an industrial job and a distributive and services job.

19. Deputy B. Desmond.—How profitable has your investment been on the hotels and catering side, where there was substantial investment?

Mr. Hickey.—The investment there has been relatively recent.

Mr. Casey.—It is only in the last three or four years that we have financed hotels. All we can say there is that we have not had any major problems so far in this area. We have certainly helped the hotel industry to grow and meet the tourist demand.

20. Deputy B. Desmond.—In a broad sense certainly there have been valuable areas of service work done by the ICC. But could it not be argued that the extent to which the ICC has been involved in the direct manufacturing sector, notwithstanding its close liaison with the IDA and with the general explosion of industrial development in the past decade, is not entirely reflected in your activity? Are not the overwhelming bulk of your advances in fixed assets? The working capital sector is quite small?

Mr. Hickey.—Yes.

21. Deputy B. Desmond.—It all seems very tight. I am leading to the kind of question which somebody may put to you. What is the extent of your relationship with the Department of Finance in terms of your investment policies, the control exerted over the ICC; would it have put a damper on the operations of the ICC over the past ten years? Could you have expanded more? Take any one of the commercial banking groups relative to your performance, their development versus your development. What is your feeling on it?

Mr. Casey.—Firstly, there has not been any curtailment by the Department of Finance. Every year we submit to the Department estimates of what we think we are likely to do and, following discussion with them, a figure is agreed for the public capital programme. Rarely has there been any major difference between us on the precise amount allocated for that year. As regards our growth, all I can say is, you do not grow dramatically in a day. On the final page of our accounts there is a chart which shows growth from 1975 to 1979. Even allowing for inflation we would feel that a growth in the volume of business, from £22 million in 1975 to £66 million in 1979 is significant.

Mr. Hickey.—I think it is fair to say that there has not been any inhibiting factor in our growth.

Mr. Casey.—No.

Mr. Heelan.—If the Deputy is asking the question whether our development into the distributive field has had an adverse effect on our capacity to invest in industry, the answer is “no”. We have had no manufacturing projects we regarded as viable or backable that have suffered as a result of our going also into distribution or for that matter into hotels.

Mr. Hickey.—That is a very good point.

Deputy B. Desmond.—I had intended leading up to that point.

22. Chairman.—You would say, in broad terms, that you have never felt the need of extra capital, that your plans, the needs, as you see them, of industry or, for that matter, in tourism or distributive trades, the needs that have presented themselves to you have never been refused because of lack of money on your part?

Mr. Casey.—In recent years, no. Certainly way back there were times when we had no money but that is locked away in history.

23. Deputy W. O’Brien.—Transport and ancillary services: what type of transport would that be?

Mr. Heelan.—Some of it would be haulage companies that are in fact in the distribution business. We would have provided them with capital for warehousing, or with hire purchase for trucks, refrigeration trucks, that kind of thing. It is closely related to the distributive trades—we were as it were oiling the wheels of industry and distribution through companies that specialise in transport. We would have financed them by way of loan or by hire purchase facilities.

24. Deputy B. Desmond.—You have become involved in factory space as such. Why did ICC decide to get involved in the industrial property market as such? You did not go on further, I notice, and become involved in, say, industrial estates. You financed the purchase as in the Rohan Group——

Mr. Hickey.—Yes, that is right.

25. Deputy B. Desmond.—— of industrial properties, advance factories and so on. How did you make up your mind on that? Did the IDA contact you or did Rohans contact you? Why did you decide to get involved in that sector?

Mr. Hickey.—In much the same way as did the IDA when they had not got a factory available for a new industry coming in. That was a great disadvantage and that is why they started the advance factory programme. We found that, unless we had factories for small industries, the institutions generally were not prepared to provide small industries with finance to acquire factories. We found that if we put up a number of factories we could facilitate the smaller industries in getting a new factory they might otherwise not have been able to get. To do that we had actually to go into the business, in partnership with the private sector, of providing these factories and getting them off the ground.

Mr. Casey.—That is true, and our catchment area goes a little further than the IDA in the sense that we cater for the distributive side also which the IDA do not. So we are providing warehouse facilities for many firms in the distributive sector.

Mr. Hickey.—A lot of new warehousing has been necessary certainly around Dublin in recent years.

26. Deputy B. Desmond.—There is a lot of warehousing now in the Tallaght area, for example. Would you provide for those?

Mr. Casey.—We would have been involved in some of those.

Mr. Hickey.—And on the airport road, out towards the airport.

27. Senator Cooney.—In a climate of tight credit do you have an order of priorities where you will lend as between the different sectors, or has the climate of tight credit affected you yet? You have been able to meet all your requests?

Mr. Hickey.—There has been no necessity to discriminate between different sectors. To get back to what Senator Cooney asked: “Have we found it easy to finance all our requirements so far?” We have but I think, we are now coming to the end of that period. We are now going to have to seek substantial finance—in fact we are already seeking it—in the form of foreign borrowing. On the basis of purely domestic finance we would not be able to maintain the level of expansion that we want to maintain.

28. Senator Cooney.—If it gets tight will you establish an order of priorities?

Mr. Casey.—Yes, we have done so in the past, when we had stringency—I am talking of ten years back—when we did have to say that only things that were very productive would get first attention and things that were arguably less so, or less proven, would have to take second place. But we have not had to make such a decision in recent years.

29. Senator Cooney.—The industries we can expect to get tight will be manufacturing first, tourism second, distributive third?

Mr. Casey.—That would probably be the pattern.

30. Deputy W. O’Brien.—You are influenced by the employment content?

Mr. Casey.—We are. It is a factor in every proposition we look at.

31. Deputy W. O’Brien.—As regards family owned factories where three or four members of the same family operate it, do they find it more difficult to get funds than other people do?

Mr. Hickey.—I do not think so. An efficiently run family business is usually a very productive and profitable business. A tightly held and tightly controlled business is often a very good and profitable one. They usually do not have much difficulty in getting finance.

32. Senator Keating.—I should like to refer to page 18 of your submission, to the section called Future Plans. We note your detailed planning for one year. One year planning in a sense is relatively easy to do. It is the next paragraph that interests me where you say: “ICC operates a five-year planning system”. Then, you give your budget and target for the years 1979-1984. On one side of your contacts with sources of finance there is the private sector. On the other side, you have Fóir and, in a slightly different way as a source of grant rather than borrowing, the IDA. You fit in between those two. You interface with them. A set of, perhaps assumed, guidelines and policy criteria must have evolved about such things as how fast do you grow, what market share you would like, the extent to which you compete with private institutions and so on. Where does a member of an Oireachtas Committee or a curious member of the public find out about those guidelines when you undertake a five-year planning operation? That is more than the almost arithmetical exercise which is involved in a one-year operation. It is inevitably much less precise because it involves policy assumptions and guidelines. Where do we find out about them apart from asking you?

Mr. Casey.—One difficulty about answering that question fully is that we are in a competitive environment and, naturally, would not want to disclose all our thinking to the outside world. In arriving at our budgets and targets we have regard to what the economic soothsayers say about the anticipated rates of growth and so on. We have a look at items such as the public plans of the IDA and so on. We have regard to what our market share is and the likelihood of our holding that in the future. I prefer not to give numbers as it is a public hearing but I assure the Senator that we look into this very carefully. There is a mass of documentation behind this very simple table.

33. Deputy B. Desmond.—Would it not be fair to say that, in the absence of a public capital programme projection to 1984, there is some difficulty in arriving at that target figure?

Mr. Hickey.—That might possibly be so.

34. Deputy B. Desmond.—Politicians of all parties are projecting in a general way a public capital programme for five years hence. Bearing in mind the lean time now in terms of industrial development and major industrial progress in Ireland it would be somewhat helpful to say——

Mr. Casey.—Yes, it is true that if there was a published figure of anticipated national expenditure or national investment we could see what our minimum likely disbursement would be in that period based on the share of the market we would expect to hold as a minimum.

Mr. Hickey.—On the other hand, one of our major objectives is to reduce our dependence on the Exchequer as soon as possible. One of the ways in which we probably will expand considerably is through foreign currency borrowing. If the State is prepared to provide certain guarantees in respect of foreign currency borrowings we could probably get very substantial foreign currency borrowings over the next few years to enable us to pass them on to Irish industry.

35. Deputy B. Desmond.—How would you take into account exchange rates bearing in mind that some State organisations had their fingers burned in the exchange rate fluctuations?

Mr. Casey.—That is precisely the point. As a matter of policy we do not undertake foreign borrowing without having the exchange risk covered.

Mr. Hickey.—The Government have guaranteed the exchange risks for us so far.

36. Deputy B. Desmond.—You are happy about being able to cope with that situation?

Mr. Hickey.—We hope to persuade the Government to continue the policy and to broaden it.

Mr. Casey.—We do not mind paying for exchange risk cover but we want to have it.

37. Deputy B. Desmond.—Do you think other bodies should have it as well?

Mr. Hickey.—In relation to certain projects that are very important for the State, it would be fair to suggest that the State might guarantee foreign currency borrowings.

38. Senator Keating.—I wish to revert to Section 5—Future Plans—of your submission* and look at the table offered to us on page 18. The sentence that follows that table says: “The projections assume an inflation rate of —% for 1980, —% for 1981 and— % in each of the following years.” I appreciate that a body such as yourselves must undershoot because if you publish what you think is the real figure that itself becomes a contributor to inflation. I accept that is the reason for that. I do not reproach you with the fact that you are undershooting for 1980. It is a very substantial undershooting, perhaps two-thirds of what the real inflation rate will be. If I look at the growth of the figures in the advances column for each annual interval, the increase from 1979 to 1980 is £— million; from 1980 to 1981 the increase is £— million; from 1981 to 1982 the increase is £— million; from 1982 to 1983 the increase is £— million; from 1983 to 1984 the increase is £— million.* These are the increases in advances. Applying a guessed at GNP deflator to them—I am guessing a more real deflator than the figure that for perfectly acceptable reasons you have given—I find circumstances in which in real terms there is very little growth or maybe none or maybe actual diminution. It would vary from year to year. Comment?

Mr. Casey.—If our assumptions were wrong we would expect the absolute figures to be higher.

39. Senator Keating.—I see. What you are planning for is a rate of real growth?

Mr. Casey.—Yes.

40. Senator Keating.—Your policy will be to ensure the availability of the funds to generate the real growth even if, with an inflationary situation, the figures come out differently?

Mr. Hickey.—Yes.

41. Senator Keating.—Do I draw the conclusion that you plan for a rate of real growth?

Mr. Casey.—Yes.

42. Senator Keating.—I was going to say at least commensurate with the rate of real growth of the economy but that might guarantee us nothing. Let me say the rate of real growth is faster than the projected rate of the economy certainly in 1980-81. Do your plans project real growth in your lendings?

Mr. Hickey.—Yes, they do. Ideally what we are trying to plan for is to be able to provide as much finance as we possibly can given reasonable interest rates. There is a sort of open-ended nature in our general approach.

Mr. Ryan.—On the Senator’s point, as we have emphasised, we are looking into a very uncertain future. About the only thing that is certain about point estimates is that they will be incorrect. Anything we can do to reduce the uncertainty we very much welcome. This is one of the reasons why we find we have constantly to review and examine these forward targets. As the members of the Committee will appreciate, many factors interact on one another, and an assumption in one area can vitiate an assumption in another. It is perhaps important to underline the fallibility and indeed inaccuracy of these figures but they do give us an indication of the direction in which we plan to go and how we plan to get there.

Mr. Heelan.—Finally, I might say that also we are subject to the overall control of the Government in the capital budget, which sets a limit annually on our total disbursements. It is not all systems go, there is that limit imposed within the framework of the capital programme.

Mr. Ryan.—This is possibly partly what Deputy Desmond had in mind. Any increase in certainty would be welcome but we understand the difficulty about it.

43. Senator Cooney.—What is your relationship with the Central Bank?

Mr. Casey.—Friendly, but informal. They do not have any direct control over our activities. We are controlled by the Department of Finance.

44. Deputy W. O’Brien.—The Central Bank exercise no control at all?

Mr. Hickey.—No. We are not a bank within the meaning of the banking legislation.

45. Senator Cooney.—How does that then affect your relationship with the commercial banks in so far as you are both competing possibly for the same type of business?

Mr. Hickey.—From time to time chairmen of the commercial banks have been heard to criticise our position when they alleged that we were not bound by the same liquidity ratios as the commercial banks. In effect we operate our own liquidity ratios which I think it is fair to say, even fairly publicly, are much the same as those operated by the commercial banks.

46. Senator Cooney.—Are you taking up business the commercial banks are unable to take up because of restrictions on them, or because you offer more attractive packages?

Mr. Hickey.—It would vary greatly at different times. There was a time in the last few years when we were practically the only providers of long-term fixed interest finance. This has now become impossible except in relation to European Investment Bank funds. There was a time certainly when the commercial banks, perhaps, had some cause for criticism that we were taking up funds. All we were doing was making it possible for firms to have greater certainty.

Mr. Casey.—Yes, on the specific point that Senator Cooney asked: were we taking business from the banks, or business that the banks were not able to do, we have been looking at that, particularly over the last six months or so, because this is the time when the banks have been very tight for credit. There is no great evidence that there are propositions coming our way simply because of a dry-up of bank credit.

Mr. Hickey.—Except propositions, of course, that are eligible for European Investment Bank finance, for specialised low-interest finance.

47. Senator Cooney.—At fixed rates?

Mr. Hickey.—Yes.

48. Chairman.—In general terms would you regard yourselves as supplementing what the commercial banks do, or as competing with the commercial banks? In other words, if you see that a particular need of industry is being fully satisfied by the commercial banks do you take the view that you should move out of that area and concentrate on areas where industry is not having its needs satisfied by the commercial banks?

Mr. Casey.—There are obviously areas of overlap. We are normally longer term lenders than the commercial banks. It is a bit like the competition between gas and electricity, in the sense that they are different products but they sometimes compete with each other. We might be lending for ten years, the banks might be lending for five years and the borrower would have a choice between the two—they would be two different packages—but he could elect for one or the other.

49. Deputy W. O’Brien.—To that extent I would say that the extra five years would be a good incentive.

Mr: Casey.—Yes.

50. Senator Cooney.—On this question of the EIB and the special agreement for small businesses, you provide 50 per cent of the capital. How many firms have availed of that and have you any information on how they get the other 50 per cent?

Mr. Casey.—On the “how many” point I have notes here. The total number of applications we have received was 509 for £36 million worth of business. To date we have not dealt with them all, obviously. But we have approved almost 400 of them, for £27 million. They also have to be approved by the European Investment Bank. Naturally there is a lag between our approval and theirs but 334 roughly have been approved by the EIB for £23 million.

51. Senator Cooney.—Presumably those 334 have made arrangements for their other 50 per cent through the commercial banks?

Mr. Hickey.—Yes, I think that is usually the other source.

Mr. Casey.—Usually the other 50% is partly made up of IDA grants because they are nearly all for fixed assets, and almost by definition there is an IDA grant available. One could say, as a rough rule of thumb, perhaps 25 per cent might be made up by the IDA. The rest would come from own sources whether it be promoters’ equity or bank overdraft.

52. Senator Cooney.—Or yourselves?

Mr. Casey.—Sometimes ourselves.

Mr. Hickey.—Of course depending on where the industry is; it might be in a very high grant area. There might be a 45 per cent contribution from the IDA in the west.

53. Senator Keating.—I wanted to revert to a previous question. I have heard, as I think many people have heard, what one might call snorts emanating from the commercial banks aimed in the general direction of the ICC. We must each assess how much weight we should give them. I wanted to ask the opposite question. Is there in your experience a circumstance in which the associated banks or others—let us simply call it the private sector of the banking system—manoeuvre you into doing what I might call the nasty bits? Is it not thinkable that you might become a further source of revenue, via State funds in this way, that is high risk, troublesome, what is finicky and so on, when they might say: “we will let the ICC do that”. To the extent that you do that, or while you do not compete with them across the whole spectrum, you are in fact mopping up the nasty parts of banking that they do not want. Thereby, you are leaving the commercial banks with a higher rate of profit than if they had to carry the whole lot. Is it not possible, thinkable, that they would like to manoeuvre you into that position, firstly? If it is thinkable, is there any evidence that that has happened, or have you any experience of it happening?

Mr. Casey.—It is easier to answer the second one. There has been no evidence that it has happened.

Mr. Hickey.—None at all. It would be fair to say that, if anything, we would have sought to do things that the commercial banks sometimes did not want to do because we play a very strong role as a development bank. We regard it as a very important role. It has often provided the finance for the expansion of industries in cases in which the commercial banks might not want to do so. I do not think we have ever been manoeuvred. We would rather be able to fulfil obligations they were unable to fulfil.

54. Chairman.—A lot of applications to you must be from people who have tried the commercial banks and failed, and put it up to you that you have a slightly higher social responsibility, as it were——

Mr. Hickey.—That is so and that is why we have the special loans scheme with the Department of Finance whereby we can, in special circumstances, provide certain finance to firms that might not be acceptable to commercial banks. The Department bear special risks in relation to that finance.

55. Senator Cooney.—How have they worked out in terms of the risk?

Mr. Hickey.—There have not been any very bad ones.

Mr. Casey.—There have been very few failures. There have been some slow pays under it but a very small total failure rate. When they are raising money that is really quasi-share capital, they are slower to pay the interest than they would be on a purely commercial basis. Successive Ministers for Finance of all persuasions have told us to make profits and pay dividends. Overall we have to work on a commercial basis rather than as a sort of relief scheme.

56. Deputy B. Desmond.—Do you ever get a Minister for Finance turning round and saying; “you got a return on capital employed of about 10.5 per cent whereas the associated banks got 23 per cent?” Since 90 per cent of your loan advances are to the small industries sector could it be argued that it is a less profitable sector?

Mr. Hickey.—It is.

57. Deputy B. Desmond.—The commercial banks are laughing all the way to the coffers with a 23 per cent return on capital employed while you get 10.5 per cent. Are the commercial banks clapping you on the back and saying you do a good job but they get twice the return?

Mr. Hickey.—On the other hand it is an essential part of our function. We are a development bank and are there to provide capital that others might not always provide.

58. Deputy B. Desmond.—You will get a Minister for Finance who will say “I would love to have a State-sponsored body which brought me a return on capital employed at 20 per cent.”

Mr. Hickey.—We hope to move in that direction.

59. Chairman.—You accept that you are expected to take greater risks and to accept slightly less profits?

Mr. Casey.—Side by side with that even this year the Minister’s proxy at our annual general meeting spoke in strong terms about the need for a higher return to the State from our activities.

Mr. Hickey.—That may give us some indication of what he may want but this is only very recent. We are working towards being less dependent on the State. The State wants that and we want it. We hope to be able to give the State an adequate return.

60. Senator Cooney.—Will this demand for a high return in any way inhibit your lending for example, your venture capital scheme which might be outside the criteria of the commercial banks?

Mr. Hickey.—A great deal would depend on what margins we get on European borrowings.

Mr. Casey.—There is always room for us to allocate a small portion of our total portfolio into things that are not immediately productive, like venture capital where you are giving someone with a good idea a chance.

Mr. Ryan.—There is a trade off between the commercial and the developmental and it is very difficult to set this down precisely. There is no doubt that areas like medium and long-term lending to small business are fairly expensive to service. Although the great bulk of them are profitable, it is not as commercially desirable a business as lending much larger amounts to triple A companies. It is a trade off and there is no doubt that if you go for profit something has to be sacrificed. It is a matter of a balance between the one and the other. We do not think we have the balance exactly right but we are working on it.

61. Senator Cooney.—In regard to the venture capital scheme how many ventures have used that scheme?

Mr. Casey.—It has been disappointing.

62. Senator Cooney.—Are the figures in the submission?

Mr. Casey.—No. We made some notes in anticipation that this question would be asked. The scheme has been in existence for about three years. We have 18 propositions under it and we have provided a total of £500,000. We have approved of a little more than that.

63. Senator Cooney.—How much was share capital?

Mr. Casey.—Only 10 per cent.

64. Senator Cooney.—How do you identify the people? Do you wait for them to come to you?

Mr. Casey.—Mostly they seek us out, although we took the initiative and tried to find them in co-operation with one of the newspapers. We set up an award scheme a few years ago. As a result of that we did identify one entrepreneur whom we are currently financing.

Mr. Hickey.—There are also some private sources who refer people to us.

Mr. Casey.—When I say 18 I do not include those projects which the IDA have helped under their enterprise development scheme. Frequently we provide supplementary capital in those cases but to count them in with our 18 would be to double count.

65. Senator Cooney.—How far advanced must the entrepreneur be with his plans before you would become interested? At what stage would he qualify for a capital loan?

Mr. Hickey.—He can come initially with just an idea.

66. Senator Cooney.—Your services include assisting him?

Mr. Casey.—In the first instance we would probably send him to the IIRS to have the technical feasibility worked out because obviously that is the first step. After that you get into marketability and his own ability to do it on a commercial basis or to see if he needs a partner.

67. Senator Cooney.—Do you provide that service?

Mr. Hickey.—Yes.

Mr. Casey.—Many involve new technology and must be referred to the IIRS.

Mr. Heelan.—In such cases we would bring in the services of the other State agencies not only the IIRS but also the IDA, CTT and so on. We would not directly provide the services but would ensure they were available.

68. Senator Cooney.—Could a person with a patent come to you for advice and assistance in bringing it to the manufacturing stage?

Mr. Casey.—Yes, he could.

69. Deputy B. Desmond.—The IDA are becoming increasingly involved in massive capital injections into major sectors such as the Asahi project. Notwithstanding the established role of the ICC, with the parallel development of the IDA has the question, on a hypothetical basis or otherwise, of the fusion of the two organisations into the one industrial and credit provision organisation ever been raised? In a country of this size where one needs a central pivot of development in the industrial promotion sector has that ever been raised?

Mr. Hickey.—Never formally.

70. Deputy B. Desmond.—Why not put the ICC, the developers and promoters together? Has it ever been studied?

Mr. Casey.—The main objection I would see to it would be that the IDA is primarily a promotional body.

71. Deputy B. Desmond.—Is it increasingly a stockholding body?

Mr. Hickey,—It has shares in some companies, not in very many.

72. Chairman.—I wonder is it increasing in quantity but not increasing in proportion. Would that be correct?

Mr. Casey.—That would be so.

73. Chairman.—The money that you have out, an increasing amount is in shares, but the proportion that is in shares is not increasing? Is not that so?

Mr. Casey.—Yes. If you are a promotional body, you are under great pressure to provide loans. If you want to bring an industry to the country, you are under greater pressure to provide loans than an independent body that can take a cool look at it.

74. Deputy B. Desmond.—True, but, a major international entrepreneur coming to Ireland, seeking a package, sees the IDA, sees the ICC, sees various sectoral promotional agencies, in a relatively small country and he wants the one thing in the one package. He will argue that he wants to see the one Minister, he wants to see the one Chairman—

Mr. Casey.—There are instances of such bodies throughout the world but, in general, the development banking function is carried out by a separate organisation. It has been found that it works better that way, that the promotional thing and the banking thing are really two separate arms.

Mr. Hickey.—Most of the IDA projects usually have their own banking connections or associations anyway, either in the countries of origin, or they make them when they come here, with one of the commercial banks. It is not so very often that major foreign projects—

75. Deputy B. Desmond.—I am not necessarily advocating that type of structure. I am a bit worried about the relationship between the IDA and the ICC. What is that relationship?

Mr. Hickey.—First class.

Mr. Casey.—We are very close to them on a number of their committees. They have a small industries committee, a re-equipment grants committee and an enterprise development committee. Some of our senior people are on each of those committees. We have good informal relations as well—but formalised to that extent on three or four of their committees.

76. Deputy B. Desmond.—On particular projects there would be direct confidential exchange of information?

Mr. Casey.—Yes, absolutely, subject to the banking confidentiality, their laws of confidentiality; in other words, with the promoter’s permission, there is a free exchange of information between the two sides.

Mr. Heelan.—Can I make a point here. First of all, on the narrow point with which the Deputy started, namely, the monitoring of share investments. For instance, where the IDA takes up shares in a company, we would think ourselves, because we have portfolio shares that we are particularly skilled in that area and that that is a service we could offer. It is part of our business. On the wider point, there is an absolute limit to the amount of State money that can go into any investment project, and our money is State money. The way things have gone up to now has been that a level of grant is determined and, in large cases, it is generally a Government matter. As part of a checks and balances system, loans are separate, the money lent has to be secured, has to come back and is given on commercial terms. There is a case for continuing the separation of loans from grant money which is repayable on a contingency basis only and where, a project having being approved and completed, the IDA move on to the next one. In our case we are concerned with an ongoing participation, the lending of money for 10 years, 15 years or whatever period it is in which we have to get it back. We have got to monitor it. There is a marked distinction in the two roles.

Mr. Hickey.—Also we have often provided the IDA with financial advice. If they are contemplating an equity investment they have asked us to evaluate it for them through Mergers Ltd. We have a greater financial role than the IDA. The IDA is more promotional, as Mr. Casey has said, but we have a much greater financial orientation and will frequently advise them.

Mr. Casey.—Mr. Hickey has experience of both organisations because he was on the IDA Board for some years too.

77. Senator Keating.—I wanted to ask a parallel question but somewhat different. I accept that the arguments for maintaining the ICC and the IDA separate are very good ones. I do not think they should be merged, I think that good liaison covers everything you require in the way of co-operation. That cannot be forced on people, and I think you have it. I keep coming back to the point that you are acting as a prop for private sector banking, because you are doing things they will not do and you are leaving them the nice bits. If that is your role—which I believe to some extent it is—then why not allow you to go on and take on all the aspects of banking, why not allow you just to be a bank, simply owned by the State in competition with privately-owned banks? That is not a call for bank nationalisation. The experience of some countries has been that you put a bit of manners on private sector banking by having a State bank and they can compete with each other genuinely. You have a good track record. You have considerable expertise; your people are very good to the extent that they are head-hunted from time to time, which is a great compliment to you.

Why not take the restraints off and say let you be a bank and undertake all the range of functions? This follows on what Mr. Hickey said about trading away from dependence on the Department of Finance.

Mr. Hickey.—It does.

78. Senator Keating.—I can see the reason for that, that if you are going to say: “OK, less and less public contribution”, then your sources are other large institutions, international bodies or Irish depositors. Then why not let you do it wholeheartedly, let you have a branch network, let you solicit deposits and let you do the whole thing?

Mr. Hickey.—The only real things that we do not do in relation to banking are providing a current account service, things like foreign exchange or maybe portfolio management advice. They are a few of the things we do not do but they are relatively small. Most of the merchant banks do not provide an ordinary current account chequing service anyway; they leave that to the commercial banks who provide a very adequate current account service. It is very expensive to set up a current account service unless you have a full branch network. It requires computerisation and very heavy expenditure. Quite honestly, as far as our clients are concerned, it would largely be unnecessary because they all have their own banking facilities with banks in the private sector.

To deal with your question about whether we are acting as a contributor to the development of private banks, I think that this would not be the case so long as we are giving the State an adequate return on capital—which is only now becoming possible because of the long build up that was necessary.

Mr. Heelan.—On the Senator’s first point, that we are taking the nasty ones from the private sector, I do not think we would altogether agree with the premise on which he built the larger case. We take decisions on fairly commercial criteria and the development element is tempered by the need to make profit. But in practice every case that comes to us has a bank in it, the bank takes a share of it, on the working capital side. There have been very few cases where the bank has come to us. They would not have come to us in relation to the taking of the nasty ones from them.

79. Chairman.—Maybe not nasty, the difficult ones?

Mr. Hickey.—No, in very many cases we share facilities with the commercial banks in that they are providing part of the capital, we are providing more parts of the capital; there are very many shared cases.

Mr. Casey.—If we were not offering the services we do, to the extent that we take on things that are less profitable—it is not that the money would then have to be found by someone else; it just would not be found at all—then desirable things might be lost.

Mr. Hickey.—Yes. A great number of small industries would never have got off the ground at all were it not for the finance we provided.

80. Chairman.—Approximately what proportion of your lending is at a fixed interest rate?

Mr. Ryan.—I have not got a figure with me.

81. Chairman.—In very rough terms? Would it be more than half, or less than half?

Mr. Casey.—It would certainly be more than half at present but it is ever-diminishing.

82. Chairman.—It is something that is bound to diminish. In regard to EIB loans, apart from getting the Government to approve and guarantee them, there are stringent criteria?

Mr. Hickey.—There are. The only thing the Government guarantees is the exchange risk. We take all the commercial risks.

Mr. Casey.—We are not just an agent.

Mr. Hickey.—We have to take the full commercial risk. If we finance a firm with EIB money and it gets into difficulties we have to pay the EIB.

83. Chairman.—In a sense you have to get Government approval as well?

Mr. Casey.—Only overall. The Government lay down the rule under which they will provide the exchange risks guarantee, which is at the moment that we can only advance to firms employing not more than 100 workers and with not more than £1 million fixed assets.

84. Chairman.—Who makes the rule?

Mr. Hickey.—It is a Government rule.

85. Chairman.—Basically what are the EIB criteria?

Mr. Casey.—First, it has to be fixed assets. Secondly, it cannot be more than 50 per cent. Thirdly, it has to be manufacturing. There are certain exclusions like sensitive industries such as the textile industry, not because it does not need the money but because in the view of the Community there is over capacity in the textile business.

Mr. Hickey.—The basic criteria are agreed between the Government and the EIB and on the basis of that they guarantee the exchange risk.

86. Chairman.—Would you like to comment on whether salary structures have inhibited you in either recruiting or retaining properly qualified staff?

Mr. Hickey.—Yes. The annual report lays that on the line, and we are justified in doing so in relation to the Devlin proposals. We have problems in that in recent years we have been acting more or less as a training ground for financial executives. They come up to a certain level and then disappear into the private sector.

87. Chairman.—To what extent have recent recommendations eased the position?

Mr. Casey.—Obviously recent recommendations represent an improvement of the position. There is still the concept, which the chairman hits out at in his statement, which is a more general point than just the recent red book. It is the whole concept of unity in the public service which seems to us to be a dead hand on enterprise in an organisation like ours. This is the real problem. There is an attempt to cast all State bodies and all public bodies into a mould and to find mirror images for everyone in every other organisation.

Mr. Hickey.—It does not work that way.

Mr. Casey.—Our competition is not with the rest of the public sector but with the banks.

Mr. Hickey.—What I asked for was simply an acknowledgement of alternatives: that different conditions obviously require different approaches.

88. Deputy B. Desmond.—Have many of your staff drifted over the years?

Mr. Casey.—Yes. It is going on all the time.

89. Deputy B. Desmond.—There is a continuous erosion. Surely you should be able to match the conditions of the commercial banking sector?

Mr. Hickey.—We do not have to match them because a lot of people like to work in the public sector. They have a genuine feeling that they are doing something worth while. We have to come somewhere near it, because we cannot expect a person to sacrifice too much for the pleasure of working in the public sector.

90. Deputy B. Desmond.—Even to go two-thirds or four-fifths of the way would be above and beyond the norms of the general public sector. I am thinking of a branch manager’s salary in an Irish commercial bank. Where would that fit into your management structure? Take a branch manager’s maximum salary and your maximum middle management salary?

Mr. Hickey.—If the public sector is to get certain services it will have to adopt different criteria. This is becoming obvious in relation to items such as oil and specialised operations. There is no way it will be able to get people who have the experience to operate these services by sticking rigidly to Devlin.

91. Deputy B. Desmond.—I accept that, but if the staff salary structures of ICC were on a par with the commercial banking sector or even four-fifths up, one could see the enormous repercussions on public service salaries. I do not necessarily hold with the view of the Department of the Public Service vis-à-vis your organisation. Comment?

Mr. Hickey.—The point we are making is that our organisation needs particular skills which are, perhaps, not needed in certain other parts of the public services.

92. Senator Keating.—As far as I am concerned this is sweet music because I am in retrospect appalled at the amount of time I spent in battles about the remuneration of people in semi-State companies, battles which were mostly lost. Take a board—deliberation was given to their appointment and they are reputable people. If you were to say, “these people, because of their position in the economy know the going rate in the banking sector, let them determine it”. In other words, it is within their competence; it is not within anybody else’s because the different sectors of the public sector are too different from each other to be able to be homogenised. Is there any danger that because of the very rigorous criteria in the market place that your people would be over-remunerated?

Mr. Hickey.—We would not tend to go as far as the full market rate at any stage. We would recognise that there is a difference and a greater security of employment.

Mr. Casey.—That is so.

Mr. Hickey.—We would never attempt to go as far even if we had full powers.

Mr. Casey.—We are part of the public sector, therefore, we must be bound by more rigorous rules than the private sector in matters of remuneration but not strait jacketed in such a way that it makes it very difficult for us to motivate and keep staff.

Mr. Hickey.—We should be able at least to come around to the Department of Finance and say on certain categories we need to do this, we just cannot keep them otherwise. The Department should look at that with some sympathy.

Mr. Casey.—We would have no objection to full information being given. Obviously at that stage a Minister who appointed directors can remove them if he thinks they are doing the wrong thing or acting irresponsibly.

93. Deputy B. Desmond.—Has Devlin eased the position?

Mr. Casey.—It is early days yet because we are still digesting it. Speaking in blunt terms, none of Devlin has yet been implemented in relation to ICC because we are still having dialogue with the Department of the Public Service.

94. Deputy B. Desmond.—Phase 1 has been sanctioned, has it not?

Mr. Casey.—It may have been sanctioned but it has not been implemented.

95. Deputy B. Desmond.—Has Phase I not been paid out yet?

Mr. Casey.—Not yet, because we are in dialogue as to the precise interpretation of all the clauses with the Department of the Public Service.

Mr. Hickey.—A most tortuous dialogue.

96. Senator Keating.—I would like to come back to this. It might seem that we are not giving enough attention to your essential work and too much attention to this. This seems to me to be immensely important to the efficiency of the whole public sector. Mr. Casey was discussing a situation in which it would be possible to have a dialogue with the Department of the Public Service about what we might call special cases and about varying from a norm. With respect this would seem to me to guarantee that a lot of the time of senior people in all the semi-State bodies and in the DPS would be taken up because there would be interminable toing and froing because every case is a special case. It seems to me that you have two possible options. One is the present system; the other is that you devolve the function and say that you have reputable people who are ICC directors; they are dismissible, let them do it. Comment?

Mr. Casey.—That is really what I was advocating but, with the proviso that there would be full disclosure. In other words, the board would decide on the range of salaries; they would send the list to the monitoring authority whoever that might be and if they said, “this is outrageous”, they could report to the appropriate Minister who could take whatever action he considered fit.

Mr. Hickey.—I do not think we would ever want to try to discuss individual cases; that would take too much time.

97. Senator Keating.—Full information but automony and disclosure?

Mr. Casey.—Yes, autonomy and disclosure.

98. Chairman.—Would you like to comment on dividend policy? The rate of dividend in recent years seems to be falling considerably behind the rate of retained profit. Who decides this? Is this something that is decided between yourselves and the Department of Finance, or how do you work it out?

Mr. Hickey.—It is really decided by the board. Certainly recently the Department of Finance have said to us that they want a commercial return on their investment and have urged us to increase dividends. The Minister’s statement to the last annual general meeting was prefaced by a strong plea for an increase in dividends. The board would probably take the view that, if conditions permitted in coming years, it would want to increase dividends substantially to satisfy the Minister and to go as far as possible to give him a commercial return on his investment in the company.

99. Chairman.—This is not a kind of policy you have adopted to build up reserves, or to enable you to——

Mr. Hickey.—It had to be in earlier days, but not so much recently.

Mr. Casey.—Yes. But we do accept that the time has come for us to increase the level of dividend, provided we can sustain the profits. In other words, the dividend cover that we have been showing would probably be lower in future years.

Mr. Hickey.—We have been showing a very conservative dividend cover.

100. Deputy B. Desmond.—Current interest rates have helped profitability in that regard, have they?

Mr. Casey.—No, not really. We are mainly working on margins. At present, to some extent we are financing fixed rate lending out of a high variable borrowing rate. For instance, all our hire purchase and leasing activities are financed on the sort of inter-bank kind of money, where we have a fixed interest commitment over three to five years, and we are financing it by whatever the price of money is on the day.

Mr. Hickey.—And, of course, the price of money has gone up greatly.

Mr. Casey.—If you think that is unsound financing I think one would have to agree with you but, nevertheless, that is the way it is done in the trade.

Mr. Hickey.—It has been the custom in the trade for years that hire purchase is financed in this way.

Mr. Casey.—Then the property development sector which we have gone into—we did it with our eyes open—we understood, in going into it, that we would be accepting a lower rate of return now, though later on it would iron itself out because, by having an equity in property, naturally one increases one’s return over the years. But what we could not have fully anticipated was that money would cost so much. Therefore, the actual short-run term cost of this property development is perhaps higher than anticipated.

101. Deputy B. Desmond.—Relative to interest rates you did well in 1978?

Mr. Casey.—1978 was a good year.

Mr. Hickey.—Of course the increase in our profits from 1978 to 1979 was very much less because of the increasing interest rates.

102. Deputy B. Desmond.—You have increased your staff quite substantially in recent years?

Mr. Casey.—We have, but so also have we increased our business. In fact, even in per head terms, the actual level of business has gone up.

103. Deputy B. Desmond.—Have you been aggressive as, say, the ACC in getting deposits?

Mr. Casey.—Reverting to Mr. Ryan’s earlier point, we deliberately decided to stay out of the under £1,000 deposit market, which is the market where—if you have got a big branch network—you tend to concentrate. So I would say, in terms of going for the small depositor, not as aggressive, no.

Mr. Hickey.—On the other hand we have a great deal of large deposits.

Mr. Ryan.—On the Deputy’s question, it is a matter of trying to bring about an appropriate financial structure to fund the kind of facilities one is providing, and within those limits we have managed to get what we regard as an appropriate rate; we target for a level of deposits. We have been reasonably successful in achieving our targeted levels.

104. Chairman.—What would your gross margin have been in the year to October 1979?

Mr. Casey.—It is at the back of our submission, Appendix K—Cost of Funding and Return on Lending. It is not actually stated but you can do it by subtraction. We got a return of 13.9 per cent on a cost of 11.1, so it is 2.8 per cent, but 1979 was not a typical year. The margin in the previous year was 4.6%

105. Chairman.—You had some recent organisational changes. Have these been successful?

Mr. Hickey.—They have only just been implemented. It is very difficult to say yet but we think they will be successful. We feel that people who are entitled to promotion should be recognised and that this must operate for the benefit of all concerned.

Mr. Casey.—We had a structure that had been there for ten years, with minor modifications, so it was obviously due for review.

106. Chairman.—Do you foresee any problems for the company in the future from the EEC harmonisation directives? Do you see any tightening up of your rules and so on?

Mr. Casey.—Not really.

Mr. Hickey.—Our connections with the European financial institutions would mean that we would be dealt with in the same way as other European institutions.

107. Chairman.—In the sense that at present you are not subject to the Central Bank—it may be, for instance, in the future that the EEC harmonisation directives would ask why are you not?

Mr. Casey.—That would not worry us.

Mr. Hickey.—No, I think we could work that one out.

Chairman.—All right. Thank you very much gentlemen.

The witnesses withdrew.

*See Appendix 1.

*See Appendix 3.

*Section 5 (Future Plans) of the Memorandum is not being published at the request (made subsequent to 12/3/1980) of the Industrial Credit Company Limited.