Jan O'Sullivan (Limerick East, Labour)
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Question 82: To ask the Minister for Finance his views on whether lending margins will increase and deposit rates paid to savers will fall at two banks (details supplied) during 2010. [11642/10]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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The Deputy will appreciate that the named covered institutions are run as arm's length operations and as such it is not appropriate for me to comment on how they manage their pricing strategies. Given the need for all credit institutions at the moment to increase their deposit taking base in order to bolster their funding bases, competition for savings in the Irish market has led to an increase in interest rates paid to savers. I do not expect that the underlying conditions which led to this rise will change dramatically in the near future.

I have stated publicly that I was disappointed by recent decisions and announcements by covered institutions to increase their variable interest rates but unfortunately such increases reflect commercial market realities including the increased cost of accessing funds. Increasing costs of deposit interest rates being one of them. The Guarantee means that the covered institutions can in fact raise funds more cheaply than they otherwise would. This is a benefit to all of their customers. All covered institutions pay the State for the costs of the Guarantee. Interest rates are at historically low levels and are likely to remain very low for the foreseeable future in overall terms and this has provided significant support for customers in the current challenging economic and financial environment.