Sunday 15 September 2019

Bank of Ireland warned over mortgage remarks

Andrew Keating, group chief financial officer of Bank of Ireland
Andrew Keating, group chief financial officer of Bank of Ireland

Fearghal O'Connor

The State's competition watchdog has written to the chief financial officer of Bank of Ireland a second time to warn him about price signalling in the mortgage market.

The letter - seen by the Sunday Independent -warned that the Competition and Consumer Protection Commission (CCPC) was concerned that banks may stymie competition.

It was reported last week that the competition watchdog had written to the bank over comments made by Andrew Keating, group chief financial officer of Bank of Ireland, about the price of mortgages increasing.

In a statement the bank said the comments, made at a results briefing, "were in relation to the macro-economic factors and capital requirements which attach to Irish mortgages".

It said that it had responded to the CCPC to confirm the "seriousness with which we comply with our competition law obligations".

In recent days, Cathal Hanley, of the CCPC's Competition Enforcement & Mergers Division, wrote to Keating and said the agency "repeats its call for officers of Bank of Ireland to refrain from making public statements, regarding future price increases of its financial products that could potentially amount to a breach of competition law".

The CCPC warned it would “continue to monitor the public announcements of Bank of Ireland and other mortgage lenders operating in the State and will take appropriate action if necessary”.

Hanley acknowledged the quotes attributed to Keating were made in the context of the bank’s results, but said “the possibility of finding a concerted practice cannot be excluded at this time”.

“We note that the recent period of competition between banks which has led to a reduction in interest rates for new mortgages took place at a time when the risk weightings of Irish banks have increased,” wrote Hanley.

“At a time when the competitive landscape in Ireland is returning to what might be seen as more normal conditions, the risk that banks may seek to bring this period of competition to an end is of concern to the CCPC,” the letter continued.

The CCPC was particularly concerned “that general comments about the future direction of mortgage interest rates by a leading mortgage provider would allow competing mortgage providers to be aware of each other’s pricing intentions”.

Hanley wrote that “this information could make it possible for competitors to coordinate their behaviour, which in turn decreases the incentives of other mortgage providers to compete against each other”.

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