Tuesday 12 December 2017

No rate cut on the cards for Bank of Ireland or Ulster Bank variables

Taoiseach Enda Kenny say stance not acceptable

Bank of Ireland chief executive Richie Boucher at Bank of Ireland’s AGM in Dublin yesterday. Photo: Gareth Chaney
Bank of Ireland chief executive Richie Boucher at Bank of Ireland’s AGM in Dublin yesterday. Photo: Gareth Chaney

Colm Kelpie and  Gavin McLoughlin

There are no plans from Bank of Ireland nor Ulster Bank to cut the interest rates on their standard variable rate mortgages.

Even though AIB has signalled it plans to cut rates, its main competitors have remained defiant.

Ulster Bank boss Jim Brown told TDs and Senators that its standard variable rate is "not overpriced". And Bank of Ireland chief executive Richie Boucher said that while it keeps rates under review, it couldn't give any commitment.

It comes just a day after Finance Minister Michael Noonan signalled in his Spring Statement that pressure would be brought to bear on the banks over the coming months.

Mr Brown told the Oireachtas Finance Committee yesterday that Ulster Bank had been reducing variable interest rates for both new and existing customers.

And he said costs faced by Ulster Bank were higher in the Republic than in other jurisdictions where it and its parent company RBS operates.

"In this context, we do not believe that our standard variable rate is overpriced," he said.

Asked if the bank had no intention of reducing the standard variable rate, Mr Brown replied: "That's correct. But we continue to monitor the rate."

Mr Boucher signalled Bank of Ireland had no immediate plans to slash its rate.

"We review all of our rates on an ongoing basis. We look at the cost of money, we look at the competitive environment, we look at the capital charges, but it would be inappropriate for me to make a commitment," he said.

Today, the Taoiseach has said that it is “not acceptable” that banks  are refusing to pass on savings from low interest rates to hard pressed mortgage holders.

Speaking at an update on the Government’s action plan for jobs, Enda Kenny said that the banks bailed out for the benefit of the taxpayer and not for the benefit of the organisations themselves.

His comments came as two of the country's biggest banks, Ulster bank and bank of Ireland, signalled that they had no plans to cut interest rates on their standard and variable mortgages.

Mr Kenny said: “It is not acceptable behaviour, I believe that it’s wrong that the banks don’t pass on lower interest rates.

“Remember, these banks were restructured and capitalised by the taxpayer for the benefit of the customers, not for the benefit of the banks.

“From an ethical point of view now that the banks have been restructured  and are on their way to making a profit again it’s just not acceptable that when they themselves can borrow at much cheaper rates that they continue to have higher rates applied to mortgage holders."

In January, Bank of Ireland announced it was to cut its mortgage rates for new customers and reduce some fixed rates only for existing variable-rate customers.

Pressure has been placed on the banks, the Government and the Central Bank to address the interest paid by customers with standard variable rates.

Mr Boucher also came under pressure to slash Bank of Ireland's variable rate at its AGM earlier yesterday, but he said he expects the bank to focus on fixed rather than variable mortgages.

"We review our products on an ongoing basis but I would expect that going forward our emphasis will continue to be on fixed rates," Mr Boucher said.

Finance expert and founder of askaboutmoney.com Brendan Burgess told the meeting that the bank was "fleecing" its customers.

"It's time now to dramatically reduce the rate you are charging to customers in the Republic of Ireland," Mr Burgess said. "You have plenty of profits and its time to use those profits to facilitate the customers."

Meanwhile, Mr Brown also said that about 2,000 Ulster Bank customers in arrears are neither paying their mortgage or engaging with the bank. "In the absence of engagement and where no repayment is being made, we are left with no alternative but to continue with legal proceedings," he warned.

Irish Independent

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