'Pay cap didn't hold up AIB jobs'

The Minister for Finance Brian Lenihan has said tax rates for businesses must remain competitive internationally.

Speaking to the American Chamber of Commerce, the Minister said that when investors made decisions about where they wanted to do business, they looked at tax rates in those countries.

The Minister also said he was in discussions with the main banks about the provision of credit to support the economy. He said the Government had specific powers, within the NAMA legislation, to direct banks to make credit available to support the economy.

He was referring to yesterday's Oireachtas Committee meeting at which AIB chief Eugene Sheehy said that, the day after NAMA began work, there would be no immediate perceptible difference in terms of lending and credit flow.

Minister Lenihan said he was in the process of making specific appointments to NAMA's board.

Referring to Bank of Ireland chief Richie Boucher's statement that the bank would not need any more state capital the Minister said :'I'm glad to see their optimism but I am not going to discuss any particular institution this afternoon in advance of the agency valuing their loan books in detail.'

He said matters of lending and further capital raising would be worked out over the course of the implementation of the agency. Mr Lenihan also said that cultural hostility to bankers and media attention, rather than the salary cap of €500,000, was what had held up the recruitment of new executives at AIB.

Speaking at the same event, Dr Paul Duffy, president of the American Chamber of Commerce in Ireland, said any measures introduced in the Budget needed to be 'carefully assessed' to ensure they did not add to the costs of doing business in Ireland.

Referring to the possibility of a carbon tax being introduced, he urged the Minister and his department to consult the National Competitiveness Council ahead of any measure being introduced in the Budget.