Banks ordered to ‘reflect’ on decision not to pass on interest rate cut by Tanaiste
TANAISTE Eamon Gilmore the has urged Ireland's three biggest banks to reconsider their refusal to pass on European interest rate cuts to tens of thousands of struggling mortgage holders.
Mr Gilmore said it was time state-owned Allied Irish Banks and Bank of Ireland, both of which have received multi-billion taxpayer bailouts, and the Ulster Bank, reflected.
And he insisted the Government was prepared to take appropriate action to force their hand.
"The reason the European Central Bank introduced that reduction is not so the banks could pocket it but so they could pass it on," Mr Gilmore said.
Taoiseach Enda Kenny and Financial Regulator Matthew Elderfield last night discussed the prospects of tough legislation to crack down on the banks and force them to pass on cheaper European interest rates.
A report on options for new consumer banking laws is expected quickly, the Tanaiste said.
"It is the intention of the Government that the interest rate reduction can be passed on to customers. We are taking this one step at a time," Mr Gilmore said.
"This is about taking action, it's not about words.
Bosses at the three lenders were hauled before the Cabinet's internal super economic council yesterday where they refused to pass on the ECB quarter per cent interest rate cut announced last week.
Their decision means tens of thousands of standard variable rate mortgage holders miss out on monthly savings of 15 euro (£12) for every 100,000 euro (£85,000) borrowed.
Mr Elderfield has complained in the past that regulators had no direct powers to tell lenders to cut rates, while Mr Kenny has already indicated he will consider new laws to force taxpayer-backed banks to pass on European interest rate cuts.
State-owned AIB said its customers had already benefited from its decision not to hike rates in line with the ECB earlier in the year.
Mr Gilmore said there was no ambiguity about the Government's position.
"The Government was very clear with the banks about our wish and determination that the interest rate will be passed to the customer," he said.
"We made it clear to the them that if that does not happen the question of legislation is something the Government will consider."
Eamon O Cuiv, Fianna Fail deputy leader, questioned whether public interest members of the bank boards should be replaced for not acting in the public interest..
"I think it's fair to say words without action do not do much for us," he said
Joe Higgins, Socialist Party TD, claimed the Government had been humiliated by bankers.