THE three leading banks in the State have refused the Government's request that they lower interest rates.
Bailed-out Bank of Ireland and AIB along with Ulster Bank have refused to drop their mortgage rates despite requests from the Taoiseach, Tanaiste and the Finance Minister.
Finance Minister Michael Noonan said the refusal of banks to pass on interest rate cuts was "a serious issue".
Mr Noonan pointed out that the ECB had dropped its interest rates amid rising threat of a second recession in the eurozone and that there was little reason to argue why Irish banks shouldn't follow suit.
Minister of State at the Department of Finance Brian Hayes described the refusal to pass on ECB interest rate reductions as "pathetic".
And he didn't rule out further action against bankers' pay in light of the rebuttal.
Permanent TSB, KBC Bank, Irish Nationwide, Bank of Scotland/Halifax and EBS have all passed on last week's eurozone rate cut of 0.25pc.
The new form of Anglo Irish Bank -- Irish Bank Resolution Corporation-- has also passed on the cut to customers.
The Government met the heads of the banks face-to-face yesterday but their request was turned down -- which ultimately affects up to 100,000 variable rate customers.
"Each of the banks stated, for different reasons, they did not intend to pass this rate reduction to their variable rate mortgage customers," a spokesman for the Department of Finance said.
Taoiseach Enda Kenny said the Government had expressed "absolute disappointment".
"I subsequently rang the regulator, Mr Elderfield, and informed him of the outcome of the meeting and I asked him that as regulator he should report to Government as to whether or not he considers this to be a level playing pitch in the interest of consumers, and if he needs further enhanced powers that Government will respond to him," he added.
The Taoiseach has now directed the Financial Regulator to check how the bank's behaviour affects competition and whether there would be a good reason to legislate against this action.
AIB, which is State owned, says there will be no decrease for its customers, because it did not hike charges when the ECB increased rates during the summer.
See Dan White - Page 15