Bank of Ireland has ruled out the prospect of cutting its standard variable interest rates following a meeting between its chief executive Richie Boucher and Finance Minister Michael Noonan.
Despite a number of reports suggesting the bank would follow AIB and other lenders and reduce its variable rates in response to political pressure, a spokesman for the Bank of Ireland has made it clear that this will not happen.
Referring to Mr Boucher's meeting with Mr Noonan last Thursday, the spokesman said discussions between the pair had focussed on the Bank of Ireland's efforts to encourage customers to avail of fixed rates as opposed to any cut in variable rates.
"The meeting was a constructive and professional one. The bank outlined its strategy and focus on fixed-rate offerings which mitigate interest rate risk for customers and the bank, the availability of the bank's fixed-rate offers to all Irish SVR customers, and the savings to the bank's Irish SVR customers from the bank's fixed-rate offers," the spokesman told the Sunday Independent.
While the Bank of Ireland's refusal to follow other lenders in reducing it's standard variable interest rates may be interpreted by some as a deliberate snub to the Government and opposition politicians alike, it is entirely consistent with the position outlined by its chief executive Richie Boucher in an interview with the Sunday Independent three weeks ago.
Mr Boucher made it clear that the Bank of Ireland's intention was to encourage its customers to avail of fixed- rate mortgages to avoid the risk posed by future interest rate increases.
While Mr Noonan said last Friday that the State's six main banks would face the prospect of a "penal levy" and possible intervention from the Central Bank if they fail to reduce their mortgage rates, the Bank of Ireland is confident that its focus on fixed rates as opposed to variable rates will be sufficient to satisfy his demands.
Consumer activist and campaigner for lower variable rates Brendan Burgess, said legislation should still be brought in to deal with the issue. He expressed his fear that the impetus for such legislation would be lost if the banks cut their interest rates in response to the finance minister's request. "I think it would be better if the Central Bank met the banks rather than the finance minister, and it would be better if Patrick Honohan had the power to direct them to change interest rates. The conversations would be more meaningful," he said.
It remains to be seen what will be the outcome of Friday's news, from the Government, that holders of variable-rate mortgages will see reductions in their monthly repayments. The Central Bank has prepared a valuable report on the complex issues involved, which was released to coincide with the Government's declaration of victory. This is a wearingly familiar pattern: the report on which any kind of coherent public debate might be based is withheld, apparently to suit the Government's convenience.