Written answers
Thursday, 18 May 2023
Department of Finance
Banking Sector
Cathal Crowe (Clare, Fianna Fail)
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214. To ask the Minister for Finance if his Department is taking any action to address the situation whereby banks and other financial institutions in Ireland have not paid any interest on deposit accounts to customers relating to the rising interest rates on bank loans; and if he will make a statement on the matter. [23933/23]
Michael McGrath (Cork South Central, Fianna Fail)
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Deposit interest rates are a means for banks to attract or maintain a stable source of funding. The determination of the rate of interest to offer to attract depositors is a commercial decision, which is the sole responsibility of the board and management of each bank.
Neither the Central Bank of Ireland nor I have a role in setting the interest rates offered by banks on monies held on deposit. Although the State is a shareholder in some of the banks operating in the jurisdiction, those entities must also be run on a commercial and independent basis, and their independence in this regard is protected by the relationship framework agreements.
In terms of the interest rates currently available on deposits, the European Central Bank (ECB) released March 2023 Euro Area Bank Interest Rate Statistics on 5 May 2023. The Central Bank of Ireland Retail interest rates release was released on 10 May 2023, and it can be accessed at: .
I am informed by the Central Bank of Ireland, that:
- Interest rates on household overnight depositsstood at 0.03 per cent in March 2023, while the euro area equivalent was 0.151 per cent.
- Interest rates on new household deposits withagreed maturity was 1.14 per cent in March in Ireland, while the euro area equivalent was 2.11 per cent.
- Interest rates on outstanding deposits’ rates with agreed maturity was 0.43 percent in March 2023 an annual increase of34 basis points since March 2022. Interest rates on outstanding deposits’rates with agreed maturity in the euro area was 1.51 percent in March 2023.
It is worth noting that banks currently hold an unusually large share of overnight deposits by historical standards. This large share of monies held in overnight deposit reflects two factors:
- First, when interest rates were low (ornegative up until July 2022), there was effectively little or nodifference between the return on overnight versus term deposits forsavers; and
- Second, much of the current build-up ofdeposits represents ‘passive’ pandemic savings – that is, savings thathouseholds built up when there were restrictions on economic activity andtherefore reduced spending opportunities during the pandemic.
Increasing competition to attract these relatively stable sources of funding could also contribute to a greater pass-through of policy rates into deposit rates over time.
The Deputies may also wish to note that the Competition and Consumer Protection Commission's (CCPC) website includes a number of comparison tools to help consumers shop around. These tools can be used to compare the features and rates of both lump sum deposit products and regular savings accounts.
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