Ulick Burke (Galway East, Fine Gael)
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Question 175: To ask the Minister for Finance his views on the increase in charges of 50% imposed by the banking sector on business since the announcement of the Credit Institute (Financial Support) Scheme; the steps he will take to put an end to this practice; and if he will make a statement on the matter. [40093/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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There are two categories of charges applied by the banks; interest-related banking charges and non-interest-related banking charges and fees.

Interest-related banking charges are determined by the banks themselves on the basis of market considerations and neither the Minister for Finance nor the Financial Regulator have any statutory role in this matter. In setting the level of such charges for a borrower, a bank would have regard to a variety of factors such as the customer's credit history, the risk perceived to attach to the loan, the cost of funds to the bank, competition considerations etc.

The Credit Institutions (Financial Support) Scheme 2008 provides the framework for granting a guarantee to the participating banks. It does not, however, provide for State assistance or participation in the banks. Accordingly, as Minister for Finance, I do not have a right to interfere in the commercial decision making of the banks.

As the Deputy will be aware, in welcoming the European Central Bank's announcement on 6 November 2008 of a 0.5% reduction in its key interest rates, I highlighted that I would expect financial institutions to pass on these reductions to their customers, in particular to those purchasing properties on variable mortgages and to small and medium-sized enterprises. This will help support sustainable growth and employment along with the maintenance of price stability in line with the ECB's objectives.

The regulation of non-interest-related banking charges/fees is vested in the Financial Regulator and credit institutions are obliged to seek the prior approval of the Regulator before any increase in such fees. In fact, Ireland is the only EU country with statutory control on such fee increases. If the increased charge to which the Deputy is referring falls within this category, it will, as I have indicated, have received the prior approval of the Financial Regulator.