I thank the Senator for raising this matter. I am deputising for the Minister for Finance who is abroad and consequently unavailable.
In the period before the bank guarantee of 2008, the then Minister had no involvement in the oversight of the banks. The current Minister is not aware of any instances of senior management in the banks converting from variable rate mortgages to tracker mortgages in that period. It is important to realise the mortgage market at that time was very different from that of today in that the variation between variable and tracker rates was small. In some instances, moving from the standard variable rate to the tracker rate would have resulted in a higher interest rate, but it was possible to switch from a variable rate to a tracker rate should a customer so request. However, regardless of what rates individual mortgage holders are on, the Minister, even if he wanted to, would have no access to the details of individual personal accounts.
I refer the Senator to two parliamentary questions on this topic that were answered in the Dáil on 15 October. Responses were provided from the two State-owned banks, Allied Irish Banks and Permanent TSB.
AIB advised the Minister at the time that for confidentiality reasons it is precluded from discussing or divulging details of individual customer accounts. AIB has informed the Minister for Finance this applies to staff who are bank customers.
Tracker rate mortgages operate by fixing a set margin over the European Central Bank, ECB, rate for the period of the mortgage. With a tracker rate mortgage, a customer's repayments rise or fall in line with ECB interest rate movements. Until 2008, it was possible to switch to a tracker rate should a customer so request. However, from October that year, AIB and the EBS, separate entities at the time, had withdrawn the product both for new business and conversion from existing non-tracker customers.
AIB withdrew its tracker mortgage product on 10 October 2008, shortly after the Government bank guarantee of 28 September. The EBS withdrew its tracker mortgage product on 13 October. Prior to that date, all customers, be they bank staff or otherwise, were entitled to convert their mortgages from variable to tracker. No customers converted their existing mortgage to a tracker product after 10 October in the case of AIB or 13 October in the case of the EBS, unless entitled to under the terms of a contract completed prior to date of tracker withdrawal.
The Minister is not aware of any instance of senior management in Irish Nationwide Building Society converting from variable rate mortgages to trackers in this period. However, the Minister does not have access to the details of individual customer accounts in the Irish Nationwide Building Society, including those of former senior management in the bank. It is important to note, in general, the Irish Nationwide Building Society did not provide tracker mortgage products. At the end of June 2012 less than 0.1% of its book were tracker mortgages linked to the ECB base rate.
Bank of Ireland is not a State-owned bank. We own 15% of its share capital, which makes us a minority shareholder in it. Bank of Ireland has also informed the Minister that owing to customer confidentiality obligations, it is not in a position to discuss details of the individual circumstances of any customer or transaction, including those of bank staff.
The Minister has been informed by Permanent TSB that no such action occurred in respect of senior management of Permanent TSB and that the bank stopped selling tracker mortgages in July 2008.