Tommy Broughan (Dublin North East, Labour)
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Question 49: To ask the Minister for Finance his views on reports that a bank with a State guarantee (details supplied) is refusing to pass on European Central Bank interest rate cuts to mortgage holders; and his views on any similar behaviour by other guaranteed and non-guaranteed banks operating here. [2971/09]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The decision on whether an institution operating in Ireland passes on ECB interest rate cuts to customers is a commercial decision for the institution concerned. While my Department monitors the impact of changes in mortgage interest rates on the Consumer Price Index (CPI), it has no direct function in relation to the individual institution's decisions on the matter. However, as the Deputy will be aware, I have publicly indicated that I expect institutions to pass on funding cost reductions to their customers, including in particular to those purchasing properties on variable mortgages and to small and medium-sized enterprises. This is important to help support sustainable growth and employment along with the maintenance of price stability.

I have been informed by the Financial Regulator that all of the covered institutions, including the institution concerned, have fully passed on each ECB interest rate cut since the bank guarantee scheme was introduced. I understand that the institution concerned will pass on the most recent cut from February 6, 2009. My Department will continue to work closely with the Financial Regulator to ensure that those institutions covered by the bank guarantee scheme do not pass on the costs of the bank guarantee to their customers in an unwarranted manner. However, it must be borne in mind that credit institutions are not primarily funded from the ECB but from a variety of sources and the cost of much of their funding has been significantly above ECB rates over the last year.