, universal banking can be a very profitable business, not least because, when banks fail, their creditors are often bailed out by government. anticipating this, investors require a smaller premium to fund the bank. the value of this implicit government guarantee can be significant, especially during market turbulence. ireland in ireland for the past five years banking has not been profitable. this is largely because of the difficulty banks have had in coping with the legacy assets on their books. a large proportion of these assets yield little by way of interest because of the low euro area money market rates to which their yield is contractually set. a large and – at least until very recently – growing, share of the assets is also not fully performing. the irish banks have set aside, and will still need to set aside, sizable provisions to enable them to absorb the inevitable credit losses on some of this portfolio, as it becomes more evident what part of the loans cannot be paid in full, and since the property - related collaterals that backed the loans at the outset no longer suffice as a backstop. faced with these problems, some foreign - owned banks, whose parents also are weakened by the crisis, have decided to withdraw from the irish market, either altogether or from large segments of it. two significant irish - controlled banks – anglo and inbs – have been liquidated. two others, aib and ebs, have been merged. aside from the group of exportoriented banking firms operating in the export - oriented ifsc context, the banking landscape is now much sparser than it was. the ability of irish banks to make their full contribution to financial services needed for the recovery and into the longer term depends on their being fully repaired after the far - reaching damage wreaked in the boom and its aftermath. much has been done here already in terms of recapitalisation, deleveraging and reduction in the cost base. but the case - by - case resolution of impaired loans, both for the sme sector and the household sector, still has a long way to go. at last there are clear indications that the operational processes put in place bis central bankers ’ speeches to accomplish this goal are gaining traction and that the problem can finally be brought under control. what will irish banking look like at the end of the decade ; what would we like it to look like? for the sake of argument i will assume that the legacy issues will by then have been put behind us. official policies and the mandates and

long hard look in the mirror, and as pre - approved control function holders to be actively considering their responsibilities regarding disclosure and whistleblowing. in more general terms, as the reputation of financial services firms has been damaged there is a tendency for a greater degree of commoditisation of services, products and product providers. if consumers do not trust providers or their products, they are understandably going to be more driven by price, when other factors may also be important in terms of suitability. concerns are so deep rooted that there is a lack of trust regarding pricing ( e. g. car insurance, mortgage pricing ), and customer treatment ( e. g. re mortgage and sme borrowers in distress ). in this context, it is unsurprising that the central bank, together with other international supervisory bodies, including, inter alia : the bank of international settlements, the european central bank ; the group of 20 ; the new york federal reserve and the bank of england 6 have identified culture as an important issue. what does good look like? while regulators have strengthened the structural requirements around governance risk, including remuneration rules, these rules are only a partial solution and are not sufficient to drive appropriate culture in firms, which is the responsibility of the board and senior management. in its paper on banking conduct and culture : a call for sustained and comprehensive reform, the g30 outlined that “ banks should specify their cultural aspirations through a robust set of principles, and fashion mechanisms that deliver high standards of values and associated conduct consistent with the firm ’ s purpose and broader role in society " 7. while focused on banks, this paper resonates and is relevant across other financial services sectors. although there is no one action that will ensure that a good culture is achieved, there are clear actions that can be taken to seek to ensure a firm ’ s culture is improved and in line with that 2 / 7 bis central bankers'speeches espoused by the board. these include : 1. the board taking responsibility for the culture of the firm and understanding the behaviours that culture drives – for example through the establishment of an ethics subcommittee to the board ; or a measurement or monitoring by the board of the firm ’ s culture through engagement with management, employee surveys or employee focus groups. 2. the board overseeing ( e. g. through an ethics subcommittee ) : recruitment policy, hiring decisions, implementation of remuneration policies that reward and incentivise appropriate behaviours in line with