Leo Varadkar (Dublin West, Fine Gael) | Oireachtas source

I thank the Deputy for raising this important matter and his ongoing interest and work on behalf of consumers and bank customers. As the Deputy and the rest of the House are aware, banks are offering mortgage holders and businesses loan breaks of between three and six months. This is very welcome as it gives people breathing space if they are struggling to pay their mortgage or business loan as a consequence of the pandemic. So far, 140,000 customers have availed of the payment break. Crucially, the loan is not reclassified as a non-performing loan, which is important for banks as it does not hit their capital and it is important for the customer because it does not affect their credit rating and the mortgage cannot be sold.

It is correct that interest accrues during the break period. The Deputy mentioned the meeting I had, as Taoiseach at the time, with the banking representatives. It was also attended by the Minister for Finance, Deputy Paschal Donohoe, and the banking chief executives. It was on 11 May. I have not seen the minutes but I was at the meeting, whereas the Deputy was not. I know what happened. The banks never claimed they could not waive interest for the period and the representatives said it would be possible for them to waive interest for the period. Their issue was that somebody had to cover the cost of the payment break.

The Deputy knows how this works. Banks might borrow money on the market for ten years and turn that into a ten-year loan or mortgage. If the mortgage is not paid back for 10.5 years or 11 years, there would be an increased cost of borrowing for the banks and the question is who will cover it. Does it come from the bank profits? Ideally, it should do but banks will have no profits this year and may not have profits for a number of years because of what is happening to our economy. Should taxpayers cover the cost? I do not believe so as it would not be fair on taxpayers, many of whom do not even have a mortgage on a home or business. Should this fall to mortgage holders who are up to date with payments? I do not believe so. It must fall somewhere and currently that additional cost is falling on the customers availing of that payment break.

I was very blunt but clear with the bank representatives and I sought assurance from them that as a consequence of them extending these mortgages or loans, they should only be covering their costs. I said to them that it cannot be acceptable for them to get some sort of premium from this or make some sort of additional profit. I am not sure if it is in the meeting minutes but I remember saying to them that if it turns out that banks somehow make additional profit or premium from this, or if they simply make more money than they would have if the loan had been repaid as originally set out, I would see this action being as serious as the tracker mortgage scandal. I told them if that happened we would come down on them like a tonne of bricks.

What I must find out over the next couple of weeks as Tánaiste and Minister with responsibility for business is whether the banks will make any extra money from this in comparison to a position where loans had not been extended. That is a fundamental point.

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