Written answers
Tuesday, 20 March 2018
Department of Finance
Departmental Banking
Pearse Doherty (Donegal, Sinn Fein)
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61. To ask the Minister for Finance the cost to his Department of negative interest rates on deposits held; the details of same for agencies under his aegis; and if he will make a statement on the matter. [11737/18]
Paschal Donohoe (Dublin Central, Fine Gael)
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In 2017, my Department was charged €117.72 in negative interest in respect of moneys for which it is accountable and are held in accounts at the Central Bank of Ireland. €26.68 of this related to the PMG Supply Account, which is a current account.
Details of the cost in 2017 to bodies under the aegis of my Department of negative interest rates on deposits held are in the following table. Of the seventeen bodies under the aegis of my Department, I am informed that nine did not incur such costs.
| Body | Cost of negative interest rates on deposits held |
|---|---|
| Central Bank | The total amount of negative interest applied to all government departments and agencies in 2017 was c. €71.3 million and covers accounts for NTMA, Finance, Revenue, Resolution Fund B, OPW, Defence, OPW and agency accounts such as ADB, IDA and European Commission. This negative interest forms part of the Bank’s revenue which in turn contributes to the Bank’s profit. For 2017, approximately 80% of the Bank’s profit will be returned to the Exchequer |
| Financial Services and Pensions Ombudsman | €4,288.41 on deposits held |
| Investor Compensation Company Limited | €6,525.48 – arising on amounts held on current accounts. NIL – arising on amounts held on (fixed-term) deposit accounts. |
| Irish Bank Resolution Corporation | I have been informed by the Special Liquidators that there is currently c. €1.5bn held on deposit by IBRC. IBRC were achieving 0% or positive interest rates on €1.36bn of these deposits and were incurring negative interest rates on the remaining €140m of deposits. Overall, in the year to 31 December 2017, net interest of €85,500 was earned on all deposits held by IBRC. |
| National Asset Management Agency | I am advised that the current rate available on cash deposits at the Central Bank is a negative 40 basis points, and that the return being currently achieved by NAMA on its cash and liquid assets is a negative 26 basis points. The net cost to NAMA in 2017 was €2.8m. |
| National Treasury Management Agency[1] | BNY Mellon - €13,933.442 Central Bank of Ireland - € 1,553,420.923 [1] The does not include the Funding and Debt area of the NTMA, including monies held for 3rd parties. Monies managed and controlled by Investment Managers on behalf of the Ireland Strategic Investment Fund (“ISIF”) are also not included. 2 This relates to cash deposits held directly by the ISIF at BNY Mellon. Cash held at BNY Mellon is swept to the Central Bank daily, however as a result of cut-off times residual cash can be retained overnight in BNY Mellon and will be charged negative interest rate charges. 3 This relates to cash deposits held by the ISIF in the Central Bank. |
| Office of the Revenue Commissioners | €205,641 The value of receipts passing through Revenue’s commercial accounts in 2017 was greater than €71 billion. |
| Strategic Banking Corporation of Ireland | Citibank - €102,622.05 Central Bank of Ireland - €67,422.77 Total - €170,044.82 Where possible, the SBCI deposits funds into Central Bank of Ireland account and will continue to do so throughout 2018. |
Negative interest arises from the necessary application by the Central Bank of Ireland of the policies and decisions of the European Central Bank.
In order to protect the position of relevant funds for which it is responsible, my Department has, in recent years, arranged for moneys to be placed with the NTMA by way of subscription for short term Exchequer notes instead of being placed on deposit with the Central Bank.
The value arising from the payment of negative interest by banks or by the State accrues to the Central Bank and adds to its profits. Some 80% of the Central Bank’s annual surplus is paid to the Exchequer. In 2017 the payment amounted to €1.836 billion in respect of the 2016 surplus.
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