Brian Stanley (Laois-Offaly, Sinn Fein)
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To ask the Minister for Finance his views on the recent decision by Bank of Ireland to increase the interest rates on their variable rate mortgages; if he has had any contact with the bank since the decision was made; his views on whether the decision will further exacerbate the mortgage crisis and if he believes that the decision should be reversed. [42269/12]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, the Bank of Ireland’s policies in relation to lending rates is a matter for the board and management of the institution. Notwithstanding the fact that the State is a significant shareholder, I must ensure that the bank is run on a commercial, cost effective and independent basis to ensure the value of the bank as an asset to the State, as set out in the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and the bank. This Framework was published on 30 March 2012 and can be found on my department’s website. (). Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of the bank, having due regard to their customers and the impact on profitability, particularly where the cost of funding to the bank, including deposit pricing, is under pressure. Neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time.

The Government and BOI are acutely aware of the social and economic impacts that any lending rate increases may have in the current environment. However, the bank has informed me that the majority of its lending products are currently priced on a par with their peers, with interest rate increases required in order to return the Bank to profitability and long term viability.