Pearse Doherty (Donegal South West, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

162. To ask the Minister for Finance the number of State backed banks that have indicated that they will pass on the ECB's recent interest rate reduction. [50262/13]

Michael Noonan (Limerick City, Fine Gael)
Link to this: Individually | In context | Oireachtas source

Following the recent announcement by the ECB of a reduction in interest rates to date none of the State backed banks have indicated that they will pass on this rate cut bar the reductions that automatically follow on Irish tracker mortgage products. The Government is acutely aware of the increasing financial stress that some households are facing in the current environment, but, ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial matter for the management and the Board of the Institution. At the same time, the Board must ensure that the day to day running of these institutions has regard to competition, market conditions and the need to develop stable commercial enterprises to meet the long term credit needs of households and businesses.

As the Deputy will be aware the Relationship Framework with the banks provides that the State will not intervene in the day-to-day operations of the bank or their management decisions. These frameworks are published on the Department of Finance website. I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure their value as assets to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. It must be remembered that in order to fund mortgages, the banks must borrow at current deposit and wholesale rates, which are currently much higher than the ECB base rate. The banks must also ensure that the rates they lend at are economically sustainable and provide a return for the bank and ultimately the State in its capacity as a shareholder.