Arthur Spring (Kerry North-West Limerick, Labour)
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194. To ask the Minister for Finance if his attention has been drawn to the net income margin being generated from variable rate mortgages within all banks in which the State is a stakeholder; and if he will make a statement on the matter. [44932/14]

Michael Noonan (Limerick City, Fine Gael)
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I can confirm for the Deputy that I am aware of the net interest margin being generated from variable rate mortgages at the banks including the discussions that were had in this regard at the recent meetings of the Joint Committee on Finance, Public Expenditure and Reform with the banks' CEOs. 

At the Committee the banks pointed out that in comparing the SVR mortgage margin of Irish banks to other jurisdictions, it is important to understand that the difference reflects many factors and in particular loss experience which determines the capital that must be held against these loans. In recent years this has obviously been very different for Irish banks compared to their counterparts in other European countries. Funding models also differ between Ireland and other countries. Finally, they pointed out the shortcomings of comparing mortgage rates against short term ECB funding rates given the significant liquidity risk which is a feature of mortgages that typically have a term of 20+ years.

The Deputy will be aware however that I, in my role as Minister for Finance, have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to product interest rates as determined by the banks from time to time.

Notwithstanding the State's shareholdings in the banks, I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure their value as an asset to the State. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and each bank. These Frameworks were published on 30 March 2012 and can be found at .