Saturday 23 September 2017

Rescued AIB is accused of 'price gouging' customers

AIB is paying its German savers three times the interest it pays here. Bloomberg
AIB is paying its German savers three times the interest it pays here. Bloomberg
Charlie Weston

Charlie Weston

State-owned AIB has been accused of "price gouging" after it emerged that it is paying more to savers in markets outside Ireland.

AIB is paying its German savers three times the interest it pays here.

The taxpayer-rescued bank is also paying savers twice as much interest in its First Trust operation in Northern Ireland.

Mortgage rates here are way above those charged in the rest of the eurozone.

AIB, which got €21bn from taxpayers to rescue it, is paying 1.4pc to German savers through a new online savings account, as a one-year fixed rate.

Here, the bank is paying just 0.45pc for its one-year fixed rate. In the North, the bank pays 1.1pc for one-year deposits.

Brendan Burgess of the Fair Mortgage Campaign said the law should be changed to allow the Central Bank to stop banks here overcharging for mortgages and paying little for deposits.

"The Central Bank and the Government continue to allow, encourage even, the Irish banks to gouge their mortgage holders so that they can rebuild their profitability and capital," he said.

AIB responded that the lesson from the financial crash was that banks were over-reliant on wholesale funding and they should, in future, source more of their funds from a range of retail depositors.

"To help insulate against any potential future liquidity shocks in Ireland, AIB decided - as a protective measure - to create the capability to source some retail funding in Germany, the largest deposit market in Europe."

Irish Independent

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