This probability [of increased banking charges] is increased by a Gadarene rush towards a policy whereby the main banks sell off profit-making, usually overseas, operations using the funds thereby generated to avoid State involvement in recapitalisation. In most rational business environments, organisations sell the unprofitable parts of the business and invest the funds in further expanding their profitable and growing areas – but Ireland, as we know, is different.
Selling the external, profitable parts of the banks may give a short-term boost to share values by reducing the dilution inherent in the State recapitalisation, but it is folly in the long term.
Apart from the consequent loss of value that ensues from the disposal of these assets, we will be left with banks that are weaker than now, being concentrated entirely in and on Ireland rather than being inherently multinational and thus possessed of inbuilt diversification. They will be less attractive to anyone – investor, customer or State. But at least the management and boards will remain entrenched . . .