Michael McGrath (Cork South Central, Fianna Fail)
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The bank's margin has increased very substantially. Its cost of funds has reduced very substantially by about one third in the past 12 to 18 months and yet Mr. Boucher is telling me it is about six years since Bank of Ireland has reduced the standard variable rate being charged. One of the bank's main competitors, AIB, has stolen a march on it in the market and has reduced its rate. I presume Bank of Ireland will have to follow suit. Mr. Boucher will not confirm that today but, ultimately, the market will dictate the bank's reaction. I submit to Mr. Boucher that the bank is taking advantage of variable rate customers. They are being exploited. It will come as a surprise to nobody that a bank seeks to maximise profits, but this bank is profiteering on the backs of variable rate customers. Mr. Boucher made the comparison with the UK market which he said is the best comparison with Ireland.

Across the Border, Bank of Ireland offers a 1.98% fixed rate up to January 2017 if I have a low loan-to-value ratio of 60% or a 2.09% fixed rate or a variable rate of just over 2% for at least two years if my LTV ratio is 75%. There is a more competitive environment in the North. If, after two years, Bank of Ireland does not keep the rate low for a customer, he or she can switch to another bank. Customers in the South do not have that option. How can Mr. Boucher justify such a massive difference between the rates Bank of Ireland charges in the Republic and the rates it charges in Northern Ireland and the rest of the UK, given his statement to the effect that both markets are remarkably similar?