Thursday 12 December 2019

BoI won't 'slavishly follow' AIB rate cut

AIB cut its interest rates last week
AIB cut its interest rates last week
Donal O'Donovan

Donal O'Donovan

The head of Bank of Ireland has given the clearest indication yet that his lender won't cut the interest rate for mortgage customers on standard variable rate.

Experts have predicted that other banks will be forced to cut rates, after State-owned AIB dropped its interest rate by 0.25pc.

But yesterday Bank of Ireland's Richie Boucher told TDs and Senators that his bank will not necessarily follow suit.

"What we learned in the past is that we don't slavishly follow other banks," he said. He was appearing at a session of the Oireachtas Finance Committee.

But Mr Boucher was pressed by politicians on the difference between the 4.5pc rate it charges customers and the around 1.5pc it pays to borrow.

Fianna Fail finance spokesman Michael McGrath said there is "no justification for banks continuing to charge well in excess of 4pc".

It is "not an exorbitant margin", Mr Boucher said. He compared favourably the rate paid by Bank of Ireland's customers to the 2.5pc interest rate that the State paid this week to borrow for 15 years on the markets.

The bank's profit margin in Ireland is in line with that in the UK, where it has substantial operations, he said.

He stopped short of ruling out a rate cut, however.

"We operate in a competitive market, we review our rates on an ongoing basis," he said.

AIB uses taxpayers money, he noted, while Bank of Ireland is answerable to its shareholders who are 86pc private investors.

Mr Boucher sought to defend his bank's record in dealing with customers in arrears - including not forgiving debts even after borrowers have agreed to sell their home.

That policy was described as "too harsh" by Labour's Arthur Spring.

Irish Independent

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