Eamon Gilmore (Dún Laoghaire, Labour)

Let me deal with the issue. I welcome Deputy Ó Cuív's support for the strong stand the Government has taken on the decision made by some of the financial institutions not to pass on the interest rate reduction to their customers. Yesterday the Government had already arranged a meeting with Bank of Ireland, Ulster Bank and Allied Irish Banks to discuss with them the issue of lending to small and medium-sized businesses which has been of concern both to Members and the Government. The meeting, between the Government's Economic Management Council and the banks, afforded us the opportunity to raise with the banks their intentions with regard to the interest rate reduction. The representatives of the three banks who attended the meeting yesterday told us it was not their intention to pass on the reduction to their borrowers. We made the Government's view very clear to them, namely, that the interest rate reduction made by the ECB should be passed on. People with mortgages need the reduction. The ECB did not reduce interest rates in order that the banks could pocket the money; it did so with a view to having the reduction passed on to borrowers and to release more money into the economy. We made that position very clear to the banks. We also made it clear to them that, in the event that they did not comply with our request, the Government would consider legislating appropriately.

Following our meeting with the banks, the Taoiseach made direct contact with the Financial Regulator and conveyed what the banks had stated. He discussed with the regulator the additional powers he might require to deal with these circumstances. We have asked the regulator to give his assessment. When we receive that assessment, the Government will take whatever decisions are necessary to ensure borrowers will not be treated in the manner proposed by the banks yesterday. We expect to receive the assessment of the regulator quickly. In the meantime, the banks concerned should reconsider the position they outlined to us yesterday. The position of the Government on the matter is very clear. The interest rate reduction should be passed on to customers. This is what we believe the ECB intended. Members and the public would want the banks to pass on the reduction.

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