The chief executive of Educational Building Society (EBS) admitted today Irish financial institutions had played a key role in helping to create an overheated economy.
Speaking on RTÉ radio this afternoon, Fergus Murphy said the lessons of the past must never be repeated and he fully understood people's anger over the behaviour of the banking sector.
Mr Murphy also said the society has no plans to increase its standard variable mortgage interest rate in the near future.
"Clearly lessons have to be learnt...governance needs to be stronger and better and clearly we've made very bad errors," said Mr Murphy. "We were a young economy, growing faster than maybe we should have and banking was at the centre of that and things got out of hand. That can never be repeated.
"I can absolutely understand how the man on the street would still be fuming over what happened over the last year," he added.
Mr Murphy said he believes there will be a gradual improvement in the Irish banking sector following the Government's disclosure over the scale of loans to be transferred to the National Asset Management Agency (Nama). However, he stressed that there was no 'single bullet' scenario where banks would return to full lending overnight.
"The banks and building societies do want to lend and Nama will help that process again by cleasing those balance sheets of toxic or poorly performing assets so the focus can be on new business," he said. "With recapitalisation again, the international community will be more willing to lend to Irish banks, futher aiding that process. The bonds we will receive from the Government on the swap of the property assets will also help."
The largest of the State's two building societies, the Educational Building Society (EBS), has the smallest property development loan book of any of the financial institutions participating in Nama.
The building society will sell Nama development loans with a face value of €527 million on its books as well as an additional €400 million to €475 million of associated loans.
Mr Murphy added the cost of the new Government bank guarantee scheme would be more expensive than the existing one. This, combined with pressure on bank profit margins, meant that an increase in standard variable rates was likely in the near future, he said.
"It is true to say that the cost of the new guarantee under EU rules will be much more expensive than the current guarantee," he said. "Of course, the cost of retail deposits has ballooned in the last year so bank margins are under severe pressure."
He said margins in Ireland were about half the size of those in the UK, Germany and France. "I do think there will be upward movement but we've no plans to increase our standard variable rate at this moment in time," said Mr Murphy.
