B of I's two public interest directors net €290,000 fees
Bailed-out bank refuses to pass on ECB mortgage rate cut to hard-pressed customers
Published 13/11/2011 | 05:00
BANK of Ireland's two public interest directors -- who were appointed to defend taxpayer interests -- have earned almost €290,000 in fees between them since they took up their jobs in 2009.
The directors -- Joe Walsh, a former Minister for Agriculture and Tom Considine, a former secretary general of the Department of Finance -- are both on the board of Bank of Ireland, which last week was the only Irish bank that still refused to pass on the latest interest rate cut to homeowners. Almost 56,000 homeowners have fallen behind on their mortgage repayments, according to the latest Central Bank figures.
The European Central Bank (ECB) cut its key interest rate by a quarter of a percentage point last week. Along with Bank of Ireland, Ulster Bank -- which is owned by the British bank, Royal Bank of Scotland -- and National Irish Bank (NIB) -- which is owned by the Danish bank, Danske Bank -- are the only banks that have refused to pass on the rate cut to struggling homeowners on standard variable mortgages.
NIB last Friday increased its interest rates on standard variable mortgages. "These are the first changes we have made to our variable home loan rate since 2008 and they are being made because the bank cannot continue to absorb the elevated cost of term funding," said a spokesman.
"We did not change our variable rate products when the ECB rate increased twice earlier this year."
At a meeting last Wednesday, the Government asked directors of AIB, Bank of Ireland and Ulster Bank to pass on the latest ECB interest rate cut to customers.
State-owned AIB initially refused to pass on the cut, arguing that it had not passed on an interest rate rise by the ECB earlier this year. The bank, however, bowed to government pressure on Thursday evening when it announced that it would pass the rate cut on to customers.
The Government holds a 15 per cent stake in Bank of Ireland and €3.5bn of taxpayers' money was poured into the bank in 2009 to prop up the bank's balance sheet.
"Interest rates continue to be under review at Bank of Ireland," said a spokeswoman for Bank of Ireland.
Sean Dorgan, a former chairman of the Industrial Development Authority (IDA), is chairman of Ulster Bank. Mr Dorgan is also chairman of the governing body of the Dublin Institute of Technology (DIT).
When asked to comment on its decision not to pass on the interest rate cut, a spokeswoman for Ulster Bank said: "We keep all our products and services under continual review, having regard to our cost of funds. Therefore, if the cost of funds goes down, we would pass on those rates."
There are six public interest directors on the boards of the Irish banks. The former Tanaiste, Dick Spring, and Dublin Airport Authority boss Declan Collier are the public interest directors on AIB.
Both Collier and Spring have received €142,000 in remuneration between them since taking up their posts. Former Minister for Finance, Ray MacSharry and Margaret Hayes, a former secretary general at the Department of Tourism and Trade, are the public interest directors for Irish Life & Permanent, which owns Permanent TSB.
Both Mr MacSharry and Ms Hayes have earned €266,000 between them since being appointed to their posts. Permanent TSB was one of the first banks to pass on the interest rate cut to its customers.
Sunday Indo Business