Thursday, 26 September 2019

Questions (46)

Richard Boyd Barrett


46. Deputy Richard Boyd Barrett asked the Minister for Finance the equivalent interest rates in banks in which he is a majority shareholder; the reason they differ; if so, the different amounts of interest a mortgage holder would pay over a 20 year lifetime on a €100,000, €200,000 and €300,000 loan, respectively, in the banks in which he is a majority shareholder in comparison to the amount they would pay if they were charged ECB rates, in view of the fact the current ECB interest rate for deposit facility is 0.5% and its marginal interest rate is 0.25%; and if he will make a statement on the matter. [38985/19]

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Written answers (Question to Finance)

As the Deputy will be aware, as Minister for Finance I have no role in setting the interest rates on lending products offered by the banks in which the State has a shareholding. The day to day operations of the banks are the sole responsibility of the boards and management teams and each bank must be run on an independent and commercial basis. The banks’ independence 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. 

In regards to your question about repayments, both AIB and PTSB have a wide range of mortgage products with differing rates. The Deputy can find the full breakdown of the various products and their applicable interest rates on the websites for the banks in question: ( and

You refer to both the ECB's interest rate for deposits and its marginal interest rate in the context of where mortgage rates are in Ireland. First of all I think it is important to note that neither AIB nor PTSB fund their mortgage books via the ECB. However it is true that Irish mortgage rates are higher than the European average. Indeed the reasons for this were explored in a report published by my department in March (Risk Weighted Assets in Ireland: The Link to Mortgage Interest Rates).

This report shows that a large part of the difference between Irish mortgage rates and European mortgage rates is linked to how capital rules are applied. The very significant loss history from the last crisis mean that Irish banks now have to hold far more capital on mortgage loans than their European peers. This and other contributing factors are discussed in the report. The report is available at:

Question No. 47 answered with Question No.12.