Martina Devlin: There's five billion reasons to quit your arrogant bank
There are almost five billion convincing reasons why Bank of Ireland should immediately pass on interest rate cuts from the European Central Bank to borrowers on standard variable mortgages.
To date, €4.7bn is the sum taxpayers have injected into the bank after reckless lending, fuelled by greed, propelled it to the brink of extinction. And a bonus reason, on top of those nearly five billion, comes in the shape of the bank guarantee scheme -- yesterday extended by the Finance Minister for another year.
Bank of Ireland would not exist today without the tax revenues and bona fides of the Irish people. But I'm at a loss to know what we get back from the bank in return for our cash and support.
Certainly nothing by way of gratitude, fair dealing or even common decency, as customers are squeezed to pay for banking losses elsewhere in the system. The bank's logo should read: "We screwed up -- now you pay."
Despite blustering and table-banging, it emerges that the Government is impotent against the bank, while the Financial Regulator says he doesn't want additional powers to bring recalcitrant bankers to heel. And so, my friends, it falls to the people.
We can't do much but we can do something. It's time to show solidarity with our fellow citizens floundering to meet crippling mortgages on properties worth less than what they paid for them. Where possible, close down your Bank of Ireland accounts.
Don't think about how long you have been a customer. Don't think about the inconvenience of adjusting standing orders and direct debits. Think about a bank which treats the taxpayer who saved its bacon with disdain.
Transfer that current account absorbing your pay cheque every month. Open a credit card account with another bank. Do you have a deposit account? Make the switch. This bank doesn't deserve to hold your money. Show your feelings by the simple expedient of removing your custom.
Incidentally, BoI's website outlines the "easy steps" needed to change over personal bank accounts and posts a list of frequently asked questions. Consult them -- then say sayonara.
The bank's continuing avarice is hurting your neighbours. There would be extra euro in many borrowers' pockets this month if Bank of Ireland wasn't intent on hoovering them up to prettify its books. But that single-mindedness -- some might say ruthlessness -- on the bank's part may mean the difference between a number of people turning on the central heating or not this winter. It could be the difference between the family across the street staying in their home or losing it.
That's because three further interest rate cuts are signalled between now and next March, and the bank will almost certainly try to ignore them too. These reductions are designed to stimulate growth in Europe, not boost a bank's profits. But BoI has a 'shareholders uber alles' approach. And yes, I know the Irish people are among those shareholders with a 15pc stake, but we also need to keep a roof over our heads.
Banks were stupid enough to dole out cheap tracker mortgages during the boom, a move costing them money today. But why should variable rate customers be penalised for bankers who bungled?
Speaking of incompetence, the Government was left with egg on its face after calling in three retail banks last week and only scoring a result with one. It's always a bad idea to bang your fist on the table and make threats unless you are in a position to follow through.
The Government's intervention with the banks has been mishandled. For starters, it called in the wrong group: AIB, Bank of Ireland and Ulster Bank. Spot the odd man out? Ulster Bank was not part of the bailout and has received no money from Irish taxpayers. While its activities are regulated in the Republic, it remains a British-owned bank -- so that was a wasted exercise.
The Government also left out two institutions it ought to have included: Irish Nationwide and Permanent TSB. Both are fully owned by the State; in the case of Nationwide, its standard variable rate remains punitive, even though it passed on the cut.
Emergency legislation was considered by the Government and rejected because our leaders -- belatedly -- realised they do not want the power to regulate interest rates.
The problem is the Government now owns or part-owns a number of banks. If it seeks to sell them, ultimately, the political right to regulate interest rates would bring down the sale price because it affects a bank's profitability. No buyer wants to take on a bank in a country where the Government can control profit margins.
But it has been unsettling to see the Government, the Financial Regulator and the Governor of the Central Bank out of step on this matter of interest rate cuts. Last month, Financial Regulator Matthew Elderfield warned that if the banks didn't pass on cuts it would result in a "policy response" to cap them. Such rises were damaging to customers and causing the arrears problem to deteriorate, he said.
Central Bank Governor Patrick Honohan intervened by saying the issue with arrears wasn't interest rates but unemployment. This was followed by the Government showing its teeth to AIB, Bank of Ireland and Ulster Bank -- and looking like a paper tiger when only AIB acceded because it is 99.9pc state-owned.
Finally, the Regulator insisted -- to some disappointment -- that he didn't want the power to cap interest rates. Heavens, but it's been shambolic.
The Government needs to liaise with the Regulator and devise a workable solution, then implement it. The see-sawing to date leaves both the Government and the Regulator appearing inept and indecisive.
As for Bank of Ireland, its inclusion once again in a limited version of the bank guarantee scheme, extended to December 2012, shows bankers never face official repercussions for their actions.
The bank is intent on taking every pound of flesh it can, even while the State underpins it. Once again, the Irish people en masse are obliged to behave in chivalrous fashion towards a venerable old lady who has reconfigured herself as Shylock.
But just remember, as individuals we don't have to carry on doing business with her.
- Martina Devlin
Irish Independent
