Lorraine Higgins (Labour)
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I thank the Minister of State for taking this matter on the Adjournment. It is important that we establish whether any staff in senior management in all the State-owned banks, including AIB, Permanent TSB, Bank of Ireland, EBS and Irish Nationwide, converted any of their variable mortgages to tracker mortgages in the six-month period before the date of the Government-funded bank guarantee or immediately thereafter. This, as we all know, was a very important time in Ireland's economic history. It was a time at which Irish banking debt was tied to the ordinary taxpayer, a decision that my party, the Labour Party, was rightly opposed to. The reality is that, at the time, the people of Ireland bailed out the bankrupt banks of the country and were left with numerous austerity budgets as a result. I commend the Minister of State and all his colleagues in government on the work they have done in trying to strike a difficult balance and to ease the burden on the people. Did the management or employees of the banks now owned by the State try to seek a benefit for themselves by converting their mortgages from variable-rate mortgages to tracker mortgages, which have transpired to be a cheaper option? I look forward to the Minister's response.

Dinny McGinley (Donegal South West, Fine Gael)
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I thank the Senator for raising this matter. I am deputising for the Minister for Finance, who is abroad and consequently unavailable.

In the period before the bank guarantee of 2008, the then Minister had no involvement in the oversight of the banks. The current Minister is not aware of any instances of senior management in the banks converting from variable rate mortgages to tracker mortgages in that period. It is important to realise the mortgage market at that time was very different from that of today in that the variation between variable and tracker rates was small. In some instances, moving from the standard variable rate to the tracker rate would have resulted in a higher interest rate, but it was possible to switch from a variable rate to a tracker rate should a customer so request. However, regardless of what rates individual mortgage holders are on, the Minister, even if he wanted to, would have no access to the details of individual personal accounts.

I refer the Senator to two parliamentary questions on this topic that were answered in the Dáil on 15 October. Responses were provided from the two State-owned banks Allied Irish Banks and Permanent TSB.

AIB advised the Minister at the time that for confidentiality reasons it is precluded from discussing or divulging details of individual customer accounts. AIB has informed the Minister for Finance this applies to staff who are bank customers.

Tracker rate mortgages operate by fixing a set margin over the European Central Bank, ECB, rate for the period of the mortgage. With a tracker rate mortgage, a customer's repayments rise or fall in line with ECB interest rate movements. Until 2008, it was possible to switch to a tracker rate should a customer so request. However, from October of that year, AIB and EBS, separate entities at the time, had withdrawn the product both for new business and conversion from existing non-tracker customers.

AIB withdrew its tracker mortgage product on 10 October 2008, shortly after the Government bank guarantee of 28 September. EBS withdrew its tracker mortgage product on 13 October. Prior to that date, all customers, be they bank staff or otherwise, were entitled to convert their mortgages from variable to tracker. No customers converted their existing mortgage to a tracker product after 10 October in the case of AIB or 13 October in the case of EBS, unless entitled to under the terms of a contract completed prior to date of tracker withdrawal.

The Minister is not aware of any instances of senior management in Irish Nationwide Building Society, INBS, converting from variable rate mortgages to trackers in this period. However, the Minister does not have access to the details of individual customer accounts in INBS, including those of former senior management in the bank. It is important to note, in general, INBS did not provide tracker mortgage products. At the end of June 2012 less than 0.1% of its book were tracker mortgages linked to the ECB base rate.

Bank of Ireland is not a State-owned bank. We own 15% of its share capital, which makes us a minority shareholder in it. In any event, Bank of Ireland has also informed the Minister that due to customer confidentiality obligations, it is not in a position to discuss details of the individual circumstances of any customer or transaction, including those of bank staff.

The Minister has been informed by Permanent TSB that no such action occurred in respect of senior management of Permanent TSB and that the bank stopped selling tracker mortgages in July 2008.

Lorraine Higgins (Labour)
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I thank the Minister for his response but I am disappointed with it. I find it does not deal specifically with the question I asked. I feel the response was drafted in such a way that we are talking around it rather than getting to the crux of the issue. Terms such as “not aware” and “in general” have been used throughout the response which is most disappointing.

The reality is the State and the taxpayer bailed out these banks. The Minister claims customer details are confidential but we own the majority of Irish banks with a stake of 15% in Bank of Ireland. The taxpayer should be given the information I sought this evening. It is regrettable that this has not happened. Will the Minister of State pass on a request for an independent investigation into this matter to the Department of Finance and the Minister? It is the State and taxpayer that will lose out as variable mortgages attract higher payments than tracker mortgages. Obviously, it will be the State that will be at a loss in terms of profits.

Dinny McGinley (Donegal South West, Fine Gael)
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I will convey the Senator’s request to the Minister for Finance. However, the Minister will never have access to the details of personal accounts of bank customers.

Lorraine Higgins (Labour)
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It is not the bank customers' details but those of banks' management. I am concerned there were activities carried on that may be akin to insider dealings. I just want to get to the bottom of that to ensure no one in bank management benefited from the bank bailout for which the taxpayer paid.

Dinny McGinley (Donegal South West, Fine Gael)
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Under the relationship framework agreement which is in place between the Department of Finance and the banks, the Minister has no statutory function in banking decisions made by individual lending institutions. The Minister must ensure the banks are run on a commercial, cost-effective and independent basis to ensure their value asset to the State as per the memorandum on economic and financial policies agreed with the European Commission, the ECB and the International Monetary Fund.

I will convey the Senator’s concerns to the Minister.