Thursday, 18 February 2021
Department of Finance
93. To ask the Minister for Finance if his attention has been drawn to plans to make an exemption for negative interest rates on solicitor client accounts, in particular, client monies being held from mortgages while a purchase is being concluded; and if he will make a statement on the matter. [9070/21]
97. To ask the Minister for Finance if he will raise with banks (details supplied) and the Central Bank the issue of the negative consequences of the decision to charge negative interest rates on solicitor client accounts largely affecting those buying or selling houses and land; and if he will make a statement on the matter. [9236/21]
98. To ask the Minister for Finance his views on the proposed imposition of charges, so called negative interest, by banks (details supplied) on transaction monies held in solicitor client accounts for clients and consumers; if he plans to address this matter given the State's shareholding in both banks; and if he will make a statement on the matter. [9242/21]
I propose to take Questions Nos. 93, 97 and 98 together.
As the Deputy is aware, as Minister for Finance I have no role in the day to day operations of any bank operating within the State including banks in which the State has a shareholding. I'm precluded from intervening on behalf of any individual customer in any particular bank. Decisions in relation to commercial matters are the sole responsibility of the board and management of the banks, which must be run on an independent and commercial basis. The independence of banks in which the state has a shareholding is protected by Relationship Frameworks which are legally binding documents that cannot be changed unilaterally. These frameworks, which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.
The application of interest rate charges is solely a commercial matter for the board and management of each bank.
Deposit balances and liquidity in general has risen significantly across the banking system in Europe in recent years as the ECB has continued to provide additional funds through their asset purchase schemes and long term refinancing operations. This has been further exacerbated by the Covid19 pandemic as households continue to stay at home and save and businesses defer investment decisions. This excess liquidity which has grown significantly in the European system has to go somewhere and in large part it gets placed back on deposit with the ECB who charge the banks -0.50%. The application of negative deposit rates by the ECB has resulted in European banks incurring a consequent cost on deposit accounts. The Irish banks are impacted in a similar way to their European counterparts. The banks across Europe have looked to pass some of the costs associated with negative rates to deposit holders with larger balances. The Irish banks are no different in this regard.
In passing on some of these costs it is important to note that banks cannot differentiate between customers in different sectors and for that reason the approach taken is to apply charges based on the size of the deposit balance.