News Irish News

Tuesday 20 March 2018

AIB axes interest on current accounts but staff keep perks

Charlie Weston and Ailish O'Hora

BAILED-out bank AIB is to stop paying interest on its current accounts.

The move was confirmed yesterday as the State prepared to pump billions more into Ireland's two biggest banks.

It also emerged that thousands of staff at AIB and Bank of Ireland (BoI) continue to receive free banking and discounted interest rates.

AIB, which has around one million customers, will stop interest payments on current accounts from June. The bank said it had no plans to hike fees and charges on current accounts.

At present, people who keep a credit balance of at least €1,500 in their accounts are able to earn interest on that.

However, since the banking crisis started, AIB has been steadily cutting that rate, reducing it from a high of 4pc on the High Interest Current Account to just 1pc today.

The Personal Current Account, which had paid interest of up to 0.5pc at one stage, will no longer pay any interest from June 15.

Earlier this year, Bank of Ireland made it difficult for consumers to avail of free banking by requiring nine payments to be made out of an account to avoid charges.

AIB said yesterday that it would not be writing to all those who were currently benefiting from the interest payments on their current accounts.

However, its staff -- and those in BoI -- will continue to avail of benefits.

The 14,000 staff of BoI and AIB continue to get free banking as well as free currency exchange, up to a limit, and cheaper mortgage deals.

These apply when interest rates rise above a certain percentage -- not disclosed by the banks -- but are not available to staff currently because interest rates are at an historic low.


But with rates expected to start rising from as early as tomorrow week when the European Central Bank meets in Frankfurt, favourable rates could soon again be a perk for bank staff.

The preferential rates would also be subject to tax.

The Department of Finance said yesterday that the new Government will review all benefits for current and former staff at bailed-out banks.

It is already looking into a range of other freebies for former bank staff including gym and golf club membership.

AIB has admitted 2,500 retired employees are entitled to claim refunds for fees paid to golf clubs, fitness centres and tennis clubs, while 2,500 former BoI staff can claim a refund of their subscription to a club of their choice.

AIB is currently 93pc owned by the State while the State also has 36pc of BoI's shares -- they have received €7.2bn and €3.5bn in funding respectively since the bank guarantee was introduced in September 2008.

It is not yet known how much funding the banks -- including Anglo Irish Bank and Irish Nationwide -- need but the figures will be revealed when the results of stress tests are released later tomorrow.

Irish Independent

Today's news headlines, directly to your inbox every morning.

Editor's Choice

Also in Irish News