Dáil Éireann Debate, Thursday - 4 October 2012
16. Deputy John McGuinness asked the Minister for Finance his views on whether a deal to remove loss making tracker mortgages from the balance sheets of covered banks would reduce the risk of those banks increasing standard variable rate mortgages, in view of the impact such increases have on customers who are unable to switch their mortgage to more competitive providers; and if he will make a statement on the matter. [42309/12]
Amharc ar fhreagraGiven discussions on any bank debt deal are on-going, it would be inappropriate of me to speculate over what future scenarios may arise based on those discussions and as no decision to transfer the tracker mortgage portfolio to any other entity has been taken, I cannot outline the impact that such a transfer would have. As 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 the Department of Finance website 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.
