Wednesday 17 October 2018

Banks understand only one thing - so hit their bottom line

Stock picture
Stock picture
Charlie Weston

Charlie Weston

It is way past the time that a big stick was used to bring the banks to heel. And a threat to make banks pay more tax may just be the stick that is needed to put manners on the lenders.

Taxpayers have reacted with fury to revelations this week that the banks have been deliberately stalling efforts by the Central Bank to get them to restore thousands of people to good-value tracker mortgages.

The Central Bank issued a progress report on its efforts to get 15 lenders to pore over their lending books and report back on realistic numbers for those wrongly denied the low-cost rate.

It makes depressing reading as shot through it is evidence that the banks continue to treat the regulators, their customers and the taxpayers who bailed them out with contempt.

Patience is wearing thin with the banks at this stage. They are obviously unaware just how hated they are by all and sundry.

Taoiseach Leo Varadkar has now threatened the bottom line of banks.

Banks have what are called deferred tax assets. This means if they lost money in the past they can write off these losses in future.

In the case of AIB, Bank of Ireland and Permanent TSB, the previous losses are so high they will not have to pay corporate tax for decades.

But a change in the law by the Government could limit the tax write-offs. This would cost the banks billions of euro.

The Taoiseach has set a deadline of the end of the year for the tracker mess to be sorted out.

Watch now as the banks will start paying attention.

The only hit that hurts is the one that costs money.

Irish Independent

Business Newsletter

Read the leading stories from the world of Business.

Also in Business