Wednesday, 17 February 2021

Questions (150, 155, 168, 176, 184, 185)

Niall Collins

Question:

150. Deputy Niall Collins asked the Minister for Finance his views on negative interest rates being imposed by banks (details supplied) and its impact on businesses; and if he will make a statement on the matter. [8407/21]

View answer

Cathal Crowe

Question:

155. Deputy Cathal Crowe asked the Minister for Finance if he will consider a proposal (details supplied) on the charging of negative interest rates and the impact of same on solicitor’s client accounts. [8467/21]

View answer

Catherine Murphy

Question:

168. Deputy Catherine Murphy asked the Minister for Finance if his attention or that of his officials has been drawn to a proposal by banks (details supplied) to introduce charges on transaction moneys held in solicitor client accounts for and on behalf of clients and-or customers or consumers; and if he has engaged with or plans to engage with the banks and-or the Central Bank on this matter. [8751/21]

View answer

Colm Burke

Question:

176. Deputy Colm Burke asked the Minister for Finance if his Department will request the banks not to impose a penalty charge on solicitors' practices who are holding moneys for clients in their client account on trust; and if he will make a statement on the matter. [8813/21]

View answer

Réada Cronin

Question:

184. Deputy Réada Cronin asked the Minister for Finance the actions he will take to protect consumers in relation to the matter of banks (details supplied) giving notice that negative interest rate charges are to apply to solicitor client accounts in conveyancing (details supplied); and if he will make a statement on the matter. [8929/21]

View answer

Michael Lowry

Question:

185. Deputy Michael Lowry asked the Minister for Finance if his attention has been drawn to concerns raised by a society (details supplied) in relation to the charging of negative interest rates in respect of moneys held in solicitors' clients' accounts; if he will consider establishing a national scheme or introduce legislation to protect consumer deposits held in solicitors' clients' accounts from negative interest rates; and if he will make a statement on the matter. [8933/21]

View answer

Written answers (Question to Finance)

I propose to take Questions Nos. 150, 155, 168, 176, 184 and 185 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 the main 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.