The Finance Minister Paschal Donohoe says he 'can't mandate' other banks to step in following the announcement that Ulster Bank is withdrawing from the Republic of Ireland market.
He said there are promising signs that Ulster Bank will engage with other Irish banks, but it's likely to be 'many years' before it's clear how the bank's loans will be sold.
Ulster Bank parent company NatWest this morning confirmed there'll be an 'orderly phased withdrawal' of the bank from the Irish market over a number of years.
They're already in talks with both AIB and Permanent TSB over the sale of portions of its Irish loan book.
Minister Donohoe told Newstalk Breakfast this is a difficult day for Ulster Bank's staff in particular.
He said the news may not have come as a surprise, but nonetheless will leave many workers concerned about their future.
The Irish State is still the largest shareholder in some other Irish financial institutions, including AIB.
However, Minister Donohoe said: “I cannot mandate other banks, even banks we have a shareholding in, to step in and perform in a certain way in relation to decisions regarding their own future… because going down that path offers even more difficult days ahead for existing banks.
“From a legal point of view, these banks have independent boards - they have to make commercial decisions."
He said it's important that Ulster Bank is willing to engage with at least two other Irish banks, but it's simply too early to say whether transactions will be possible.
While Minister Donohoe said there will now be opportunities for other banks like Permanent TSB to grow, there are "many, many bridges to cross" before the company agrees any transaction with Ulster Bank.
Today's news is also likely to reignite debate about why Ireland is not proving an attractive market for more banking firms.
Minister Donohoe said that's something that will need to be reflected on 'another day'.
For now, he reassured people he has no plans to change any of the protections currently in place for mortgage holders.
