Finian McGrath (Dublin North Central, Independent)
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Question 39: To ask the Minister for Finance his views regarding the EBS interest rate (details supplied). [38648/11]

Michael Noonan (Limerick City, Fine Gael)
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The merger of AIB and EBS was formally completed on 1 July 2011. Prior to the completion of the merger, each of the banks set their variable mortgage rates according to the levels, calculated by the respective management teams and boards, that was required for each of the institutions to operate as a commercially viable entity in light of the challenging market conditions, the expected cost of funds, future impairments and ongoing operational costs. Notwithstanding the merger of the two banks, EBS continues to operate as a wholly owned subsidiary of AIB with its own individual banking license, brand and cost structure. This arrangement has been determined by the Board of AIB as being the most effective method of integrating the EBS business whilst retaining the core strengths of each individual entity which should return the greatest value to the State over time as shareholder. While this operational position exists it is likely that AIB and EBS will continue to offer different products to customers and as such, the banks can be expected, in the short to medium term, to price their mortgages and deposits differently from each other in the marketplace.

Ultimately the pricing of financial products, including variable mortgage interest rates, is a commercial decision for the respective management teams and boards of the banks having given due regard to its customers and the State as majority shareholder.