Dáil Éireann Debate, Tuesday - 2 October 2012
126. Deputy Simon Harris asked the Minister for Finance having regard for the failure of Irish banks, in State ownership or where the State has significant share holdings, his view on the need for the European Central Bank cuts in interest rates to be passed on to mortgage holders, the action he will take to address this; and if he will make a statement on the matter. [41542/12]
View answerAs the Deputy will be aware, the Banks policies in relation to lending rates is a matter for the boards and management of each institution. Notwithstanding the fact that the State is a significant shareholder in various institutions, I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of each bank as an asset to the State, as set out in the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. Relationship Frameworks have been specified that define the nature of the relationship between the Minister for Finance and the banks. These Frameworks were published on 30 March 2012 and can be found at; http://banking.finance.gov.ie/presentations-and-latest-documents/. Ultimately the pricing of financial products, including standard variable mortgage interest rates, is a commercial decision for the management team and board of each bank, having due regard to their customers and the impact on profitability, particularly where the cost of funding to each bank, including deposit pricing, is under pressure. Neither the Central Bank nor the Department of Finance has a statutory function in relation to interest rate decisions made by individual lending institutions at any particular time.
