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Crisis-hit BoI pushes up its lending rates

BANK of Ireland has announced a range of lending rate hikes -- just days after the State took a 16pc stake in the business.

The bank said it would raise the interest rate charged to customers on overdrafts and personal and student loans.

Despite the increase, the lender is set to cut the interest it pays to current account customers who stay in in the black.



DIVIDEND

The bank has a 38pc market share in current accounts -- more than any other lender.

Taxpayers this week ended up with 16pc of Bank of Ireland (BoI) after the EU Commission stopped the lender from paying a €250m dividend to the exchequer in return for €3.5bn of public money that had been put into the bank last year. This dividend was converted into shares instead. BOI's new higher rates will come into effect from April 28.

The hike in the interest rate it charges personal customers for an overdraft will be from 13.7pc to 14.8pc.

This includes the €25 fee for setting up an overdraft facility.

For those who end up overdrawn with no facility, there is an additional penalty interest rate charge of 7.2pc.

This means those who find themselves with an unauthorised overdraft will have to pay interest of 22pc.

Personal loan rates will go up from from 12.4pc to 13.5pc .

But the rate rise will be lower for amounts of €10,000. The new rate will rise from 11.9pc to 13pc, while for €15,000 the interest rate goes from 11.7pc to 12.8pc. Meanwhile, third-level student loan and overdraft are to increase from 10.8pc to 11.9pc, while the graduate loan and overdraft rates will rise from 8.7pc to 9.7pc.

The interest paid on current accounts will drop from 0.75pc to 0.25pc.



COMPETITIVE

"Bank of Ireland is a leading provider of consumer lending to Irish consumers and this decision was taken to ensure the bank maintains its commitment to support customers in an economic downturn and continue to provide competitive products," BoI said in a statement.

Banking experts predict that charges, fees and interest rates will spiral this year as lenders try to stem losses from loans.


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