Tuesday, 2 Jul 2013

Written Answers Nos. 195-214

Universal Social Charge Exemptions

Ceisteanna (195)

Pearse Doherty

Ceist:

195. Deputy Pearse Doherty asked the Minister for Finance the cost of abolishing the additional 3% universal social charge on income for self-employed earners over €100,000. [31721/13]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that the full year cost, estimated by reference to 2013 incomes, from abolishing the additional universal social charge of 3%, which is currently applicable to self-employed income in excess of €100,000, would be of the order of €130 million. This estimate is derived from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Universal Social Charge Yield

Ceisteanna (196)

Pearse Doherty

Ceist:

196. Deputy Pearse Doherty asked the Minister for Finance the revenue that would be raised for the Exchequer by increasing the top rate of USC paid by PAYE workers by an additional 3% on income over €100,000, similar to that charged to self-employed top earners. [31727/13]

Freagraí scríofa

Minister for Finance

I am advised by the Revenue Commissioners that the full year yield, estimated by reference to 2013 incomes, from extending the additional universal social charge of 3%, which is currently applicable to self-employed income in excess of €100,000, to all PAYE income earners at this level of income would be of the order of €71 million. The Universal Social Charge is an individualised charge and as such, the estimate of yield is based on individual incomes of more than €100,000. The estimated yield is based on confining the extension of the 3% rate to the portion of income which is in excess of €100,000, that is, the increase is not applied to the portion of total income earned up to €100,000. This estimate is derived from the Revenue tax-forecasting model using actual data for the year 2010 adjusted as necessary for income and employment trends in the interim. It is, therefore, provisional and likely to be revised.

Mortgage Arrears Proposals

Ceisteanna (197)

Maureen O'Sullivan

Ceist:

197. Deputy Maureen O'Sullivan asked the Minister for Finance in view of the increasing magnitude of the mortgage crisis here and the Central Bank of Ireland's new Code of Conduct on Mortgage Arrears, if he has taken into consideration consumer protection advocates' comments on the changes as absolutely appalling, including the removal of the 12 month moratorium on legal action, reduction in protection of home owners from excessive contact from banks and the lack of independent appeal if a home owner cannot comply with lender requests; the way he will empower home owners in the resolution process in order to address the power imbalance between lender and home owner; and if he will make a statement on the matter. [31737/13]

Freagraí scríofa

Minister for Finance

The Central Bank has now concluded a review of the Code of Conduct on Mortgage Arrears, CCMA, following a public consultation process, with in excess of 230 submissions received. The revised CCMA was published on 27 June 2013 and came into effect on 1 July 2013. The submissions made, as well as feedback document outlining the Central Bank’s response to some of the main issues raised, are available on the Central Bank’s website, www.centralbank.ie. The CCMA provides an integrated and cohesive package of consumer protection measures for borrowers facing or in mortgage arrears. It reflects the current mortgage arrears situation and seeks to deliver on the following principles, to:

- ensure appropriate resolution of each borrower’s arrears situation;

- ensure that lenders deal with borrowers in a fair and transparent manner;

- support and facilitate meaningful engagement between lenders and borrowers; and

- ensure borrower awareness of the benefits of co-operating with their lender, and the consequences of not co-operating.

With regard to the moratorium, to clarify, the 12 month moratorium applied from day 31 after arrears first arose and did not take into account any time taken by the lender to gather information from the borrower, complete an assessment or make an offer. The revised CCMA requires a lender to wait at least eight months from the date the arrears arose, before legal action can commence against a co-operating borrower.

Separately, regardless of how long it takes the lender to assess a case, and provided that the borrower is co-operating, the lender must give three months’ notice to the borrower before they can commence legal proceedings where:

- the lender does not offer an alternative repayment arrangement; or

- the borrower does not accept an alternative repayment arrangement offered by the lender.

This will give co-operating borrowers time to consider other options that may be available to them, such as voluntary surrender, voluntary sale or a personal insolvency arrangement. The combined effect of the protection period and the notice period is that, for a co-operating borrower, legal proceedings may not commence until three months from the date the letter is issued (where lender declines to offer an arrangement or where the borrower does not accept an arrangement offered) or eight months from the date the arrears arose, whichever date is later. The revised CCMA also sets out a requirement for lenders to draw up a contacts policy that will apply to all communications with borrowers in arrears or pre-arrears, and must be approved by the lender’s board of directors.

To mitigate against the risk of harassment resulting from the removal of the limit on contacts, provision 22 of the revised CCMA will require lenders to ensure that:

a) communications with borrowers are proportionate and not excessive, taking into account the circumstances of the borrower, including that unnecessarily frequent communications are not made;

b) communications are not aggressive, intimidating or harassing;

c) borrowers are given sufficient time to complete an action they committed to, before follow up communication is attempted; and

d) steps are taken to agree future communication with borrowers.

In relation to appeals, the Central Bank does not have the power to require lenders to delegate commercial decisions in relation to debt restructuring to independent parties. A complaint may of course be made to the Financial Services Ombudsman, FSO, including in respect of an appeal. The FSO will consider whether the lender complied with the CCMA in reaching the decision and may direct a lender to re-assess the borrower’s case.

The Deputy will also be aware that the new Personal Insolvency Act provides new statutory insolvency frameworks to allow debtors, through the utilisation of a professional personal insolvency practitioner, and creditors, to consider an arrangement to resolve unsustainable mortgage and personal debt. The legislation provides a legal framework for the resolution of mortgage arrears, as well as other personal debt, and it will provide certainty for borrowers and lenders alike about the consequences of non-payment and failure to reach agreement. The effect of this legislation is to rebalance the relationship between debtors and creditors and to offer more accessible and effective options to debtors to deal with debt difficulty.

Also, in preparing a Personal Insolvency Arrangement which can include mortgaged assets, there is an onus on a personal insolvency practitioner to formulate a proposal, insofar as reasonably practicable, on terms that will not require the debtor to dispose of an interest in or cease to occupy a principal private residence. The Insolvency Service of Ireland, which will oversee the operation of the new insolvency frameworks, has now been established and will shortly begin accepting applications for the new personal insolvency processes.

Banking Sector Regulation

Ceisteanna (198)

Micheál Martin

Ceist:

198. Deputy Micheál Martin asked the Minister for Finance his views on whether banking regulation has got tighter here; and if he will make a statement on the matter. [23707/13]

Freagraí scríofa

Minister for Finance

A well-regulated, effectively supervised, competitive and more stable financial services sector is crucial to our economic recovery. It is important too for the continued development of Ireland as a centre for international financial services and as a location of choice for international foreign financial services firms. A range of reforms have been introduced to underpin a more effective and efficient financial regulatory regime. The Central Bank Reform Act 2010 gave effect to significant structural changes in the operation of financial regulation in Ireland. It provided a statutory basis for a comprehensive domestic regulatory framework for financial services and set out new powers for the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers. The Central Bank (Supervision and Enforcement) Bill 2011, which is being considered at Report Stage in the Seanad, further strengthens the ability of the Central Bank to impose and supervise compliance with regulatory requirements and to undertake timely prudential interventions. These reforms followed on from the reports of Prof. Honohan and Messrs. Regling and Watson which identified a range of regulatory failures which were instrumental in the financial crises.

At EU level, the Irish Presidency succeeded in agreeing a number of dossiers which balance responsible governance with the need to avoid unnecessary burdens, thereby ensuring that opportunities for economic growth and job creation are maximised. That work will ensure that our regulatory framework is benchmarked against other EU and international jurisdictions and enable us to work in building growth for the future that is underpinned by a sound regulatory environment.

Tax Code

Ceisteanna (199, 201)

Micheál Martin

Ceist:

199. Deputy Micheál Martin asked the Minister for Finance if he is concerned about the rate of corporation tax here within the EU; and if he will make a statement on the matter. [25194/13]

Micheál Martin

Ceist:

201. Deputy Micheál Martin asked the Minister for Finance if Prime Minister Cameron has expressed concerns to him regarding tax structures of global companies here; and if he will make a statement on the matter. [25196/13]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 199 and 201 together.

On the question about contacts from Prime Minister Cameron regarding the tax structures of global companies here I can inform the Deputy that there has been no contact from Prime Minister Cameron regarding the tax structures of global companies here. The Government has consistently stated its commitment to the 12.5% corporation tax rate which has the support of all the major parties and the majority of Deputies in this House. We have a very strong track record of attracting companies of real substance to invest and create thousands of jobs in Ireland. Many of the large Multi-National Corporations, MNCs, are here for many years and regard Ireland as an excellent base from which to serve their customers in Europe and further afield. Our competitive taxation system is just one element of what makes Ireland attractive to MNCs. We remain committed to our competitive 12.5% tax rate and I have no concerns whatsoever regarding Ireland's ability to maintain this rate.

In addition a low corporate tax rate is a tool to address the economic limitations that come with being a peripheral country, as compared to “core” countries. Furthermore taxation is a powerful instrument of economic policy. Retaining the right of EU Member States to decide taxation rules and levels allows Member States to take account of their differing positions in the economic and business cycle. Therefore taxation may also be used as a tool to stimulate the economy or to cool it down in case of risks of overheating. However, it is important to make a distinction between a competitive tax economy and harmful tax competition. Ireland is does not engage in harmful tax competition. Ireland just like other EU countries believes in fair tax competition and building on the work of the Global Forum on Tax Transparency, unfair tax competition is an issue that needs to be examined.

EU Issues

Ceisteanna (200)

Micheál Martin

Ceist:

200. Deputy Micheál Martin asked the Minister for Finance if he was consulted regarding the recent nomination to the board of the European Bank for Reconstruction and Development; and if he will make a statement on the matter. [30041/13]

Freagraí scríofa

Minister for Finance

As Governor for Ireland on the Board of Governors of the EBRD, it is my responsibility to nominate a candidate to represent Ireland on the Board of Directors. In this regard I can confirm that I nominated and voted in favour of Mr. Sean Donlon's appointment to the Board which will take effect from 1 August 2013.

Question No. 201 answered with Question No. 199.

Single Euro Payments Area

Ceisteanna (202)

Dara Calleary

Ceist:

202. Deputy Dara Calleary asked the Minister for Finance if he is satisfied with progress made on the implementation of a single euro area payments scheme; and if he will make a statement on the matter. [24428/13]

Freagraí scríofa

Minister for Finance

The aim of the Single Euro Payments Area, SEPA, project is to create a single market for euro-denominated retail payments. SEPA is an EU initiative that will change the way that these payments are processed across Europe. SEPA will allow payment systems users to make euro-denominated retail electronic payments to payees located in any of the participating countries, using a single payment account and a single set of payment instruments (the participating countries are the EU member states, together with Iceland, Liechtenstein, Norway, Switzerland and Monaco). SEPA comes into full effect on 1 February 2014 and businesses will need to ensure that payroll, direct debit and accounting systems are SEPA-ready. SEPA will introduce new business rules in relation to retail electronic payments and implement common standards in all participating countries for issuing and executing the underlying payment instructions. SEPA will deliver tangible benefits to businesses, for example by allowing faster settlement and simplified processing will improve cash flow and reduce costs.

The implementation of SEPA within Ireland is overseen by the National Payments Plan, NPP, Steering Committee, which was established in 2012 to modernise the way payments are made in Ireland. In this regard, an NPP-SEPA sub-group has been formed, consisting of representatives of consumers, businesses, Government and banks. Officials from my Department are represented on this group which provides an avenue for the discussion of any issues that arise in the process of migrating to SEPA. Progress towards migration is being made and progress will continue to be monitored closely to ensure an efficient migration to SEPA. More information on SEPA can be found on the website www.readyforsepa.ie.

European Investment Bank Loans

Ceisteanna (203)

Dara Calleary

Ceist:

203. Deputy Dara Calleary asked the Minister for Finance the way the European Investment Bank investment can be maximised to support jobs and assist reaching the targets for employment growth; and if he will make a statement on the matter. [24427/13]

Freagraí scríofa

Minister for Finance

Since Mr. Werner Hoyer’s appointment as President of the EIB in 2012, there has been a deepening and widening of engagement between Ireland and the Bank. A joint High Level Working Group, HLWG, was established to identify concrete and flexible mechanisms to enhance the Bank’s support for Ireland’s growth agenda. The EIB and Ireland are strongly committed to working together to enhance the Bank’s activity in the country and this commitment is beginning to bear results. EIB group activity in Ireland in 2012 was almost €600 million, representing an increase of over €100 million in 2012 over 2011 levels and covering a diversified range of sectors and transactions. Funding in 2013 is on track to improve upon on 2012 levels. Financing for SMEs is a key part of reaching targets for employment growth, SMEs are vital to Ireland in terms of job creation and boosting economic growth. To put this in context SMEs make up 99% of Irish businesses and account for almost 70% of employment in the State. A number of Government Departments including the Department of Jobs, Enterprise and Innovation are working closely together to ensure that Ireland secures as much funding for our SMEs as possible.

There have been positive results in this regard as evidenced with the recent announcement of the EIB of the provision of €200 million for investment in AIB for small and medium companies across Ireland. This represents the latest EIB support for SMEs in Ireland since an earlier lending programme intermediated by AIB in 2011. As part of the Management Committee visit to Ireland in April, the EIB delegation met with myself and a number of other Government Ministers including Deputy Bruton, where it was highlighted that access to funding for Irish SMEs is a priority for Ireland.

The Deputy may be aware that earlier this month, my colleague, the Minister for Education and Skills signed a €100 million loan agreement with the European Investment Bank, EIB, to further support the Government’s investment in school buildings. SMEs are likely to have significant involvement in these building projects. Most recently, the European Council welcomed a report last week, which the European Commission and the EIB had prepared on the financing of the economy. At that meeting, the European Council agreed on a number of measures and welcomed the intention of the Commission and the EIB to implement them as a matter of priority and to present a comprehensive report on their implementation ahead of its October 2013 meeting, with quantitative objectives, instruments and a timetable. The following measures were agreed:

- To step up efforts by the EIB to support lending to the economy by making full use of the recent increase of EUR 10 billion in its capital. The European Council called on the EIB to implement its plan to increase its lending activity in the EU by at least 40% over 2013-2015. To this effect, the EIB has already identified new lending opportunities of more than EUR 150 billion across a set of critical priorities such as innovation and skills, SME access to finance, resources efficiency and strategic infrastructures;

- To expand joint risk-sharing financial instruments between the European Commission and the EIB to leverage private sector and capital markets investments in SMEs. These initiatives should ensure that the volume of new loans to SMEs across the EU is expanded, respecting the principles of financial soundness and transparency as well as the MFF ceilings. The Council, in consultation with the Commission and the EIB, will specify without delay the parameters for the design of such instruments co-financed by the Structural Funds, aiming at high leverage effects. The necessary preparations should be made to allow these instruments to begin operating in January 2014;

- To increase the European Investment Fund's credit enhancement capacity;

- To gradually expand of the EIB's trade finance schemes to favour SME business across the Union, especially in programme countries;

- To strengthen the cooperation between national development banks and the EIB to increase opportunities for co-lending and exchanges of best practices;

- To develop alternative sources of financing in close cooperation with Member States.

Small and Medium Enterprises Supports

Ceisteanna (204)

Dara Calleary

Ceist:

204. Deputy Dara Calleary asked the Minister for Finance his views on whether formal targets for debt resolution for the small and medium enterprise sector similar to the mortgage arrears resolution targets process would assist economic recovery and job creation; and if he will make a statement on the matter. [24551/13]

Freagraí scríofa

Minister for Finance

In June 2013 the Central Bank set quarterly institution-specific performance targets for covered banks to move distressed borrowers onto longer-term solutions. The targets set reflect the banks’ capacity, processes and systems. The Credit Review process remains available to any SMEs whose credit has been reduced or withdrawn by the pillar banks as well as when credit is refused by them. I would strongly advise any SME whose credit is reduced or withdrawn to avail of the services of the Credit Review Office. The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. It also recognises that businesses with legacy debts may be viable. One of the key priorities of the Programme for Government is to ensure that an adequate pool of credit is available to fund SMEs in the real economy during the restructuring and downsizing programme.

Bank Charges

Ceisteanna (205, 206, 213)

Dara Calleary

Ceist:

205. Deputy Dara Calleary asked the Minister for Finance his views on the impact of increased bank charges on business activity and employment levels; and if he will make a statement on the matter. [24434/13]

Dara Calleary

Ceist:

206. Deputy Dara Calleary asked the Minister for Finance his views on whether business activity and maintenance of employment is being hampered by the failure of banks to reduce variable loan rates in line with the recent ECB rate reduction; and if he will make a statement on the matter. [24429/13]

Peadar Tóibín

Ceist:

213. Deputy Peadar Tóibín asked the Minister for Finance the steps taken to ensure that banking lending rates to the small and medium enterprises sector reflect international borrowing rates and that bank charges reflect the need to support SMEs. [24453/13]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 205, 206 and 213 together.

The Government recognises that SMEs are the lifeblood of the economy and will play a vital role in the recovery of employment growth in our country. It is also very conscious of the costs faced by SMEs in doing business and one of the aims of the Action Plan for Jobs 2013 is to reduce controllable costs of doing business. I have no statutory function in relation to business interest rate and decisions made and charges imposed by individual lending institutions at any particular time. The decisions financial institutions operating in Ireland make on the interest rates and other fees they charge to customers are commercial decisions for the institutions concerned. Interest rates are determined by a broad range of factors including ECB base rates, deposit rates, market funding costs, the competitive environment, and an institution’s overall funding.

Given concerns over breakdown in monetary transmission and in particular increasing fragmentation within the Single European Market as highlighted by the high interest rates for SME lending in the periphery the ECB is currently considering a number of options that could reduce costs of funding in the periphery. In particular a technical group made up of the EU EIB and ECB is currently exploring the possibility of developing a market for SME-backed ABS as a way to enhance actual credit flows to SMEs.

Job Creation Issues

Ceisteanna (207, 215)

Dara Calleary

Ceist:

207. Deputy Dara Calleary asked the Minister for Finance the level of economic growth that would be required to bring the unemployment rate below 10% by 2015; and if he will make a statement on the matter. [24407/13]

Peadar Tóibín

Ceist:

215. Deputy Peadar Tóibín asked the Minister for Finance his response to the view that increases in growth rates will not deliver the scale of job creation required to reduce significantly the rates of unemployment. [24464/13]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 207 and 215 together.

Over the past few quarters, we have seen a number of relatively encouraging developments in the labour market. Data from the latest Quarterly National Household Survey show that employment on an annual basis increased by 1.1% in the first quarter of 2013, the second successive quarter of annual growth. In May, the standardised unemployment rate stood at 13.7%, substantially down from the peak rate of 15.1% in February of last year.

In line with these latest developments, my Department is forecasting modest employment growth in 2013, with employment expected to continue expanding thereafter. However, over the medium term increased labour supply is likely to result from the assumed economic recovery as participation rates pick-up and the pace of outward migration slows. In other words, while this pick-up in employment is expected to result in some decrease in the unemployment rate in the next few years, increasing labour supply will likely curtail, at least to some extent, the decline in the unemployment rate.

As outlined in the Irish Stability Programme – April 2013 Update, my Department expects the unemployment rate to average 12.8% in 2015. This is based on annual average GDP growth of 2.3%. However, I would stress that this unemployment projection takes account only of policies which are known. The impact of measures yet to be announced will be factored into the Department’s macroeconomic forecasts as and when the specifics of these measures become available. If the pace of economic growth is stronger than expected then unemployment could potentially fall more rapidly; however, as outlined above, labour supply might also increase at a faster pace.

Finally, I would like to emphasise that the Government remains committed to tackling the unacceptably high level of unemployment. Reflecting this, the Action Plan for Jobs 2013 set out over 333 actions to be undertaken in the coming year to support job creation and complement measures already undertaken in the Jobs Initiative and the Pathways to Work.

Credit Review Office Remit

Ceisteanna (208)

Dara Calleary

Ceist:

208. Deputy Dara Calleary asked the Minister for Finance his views on whether the Credit Review Office has sufficient resources to fulfil its mandate; his views on the success to date of the Credit Review Office; and if he will make a statement on the matter. [24412/13]

Freagraí scríofa

Minister for Finance

The Deputy may be aware that I published an independent assessment of the Credit Review Office late last year and that this assessment was broadly positive about the effectiveness of the Office. That said, I remain concerned at the low level of numbers of SMEs seeking reviews by the Credit Review Office. The most recent report by the Credit Reviewer shows that the Credit Review Office upheld the credit appeal in 135 cases or 57% of cases decided. The upheld appeals have resulted in €16.8M credit being made available to SMEs and farms, protecting 1,297 jobs. This shows that there is a strong prospect of success for SMEs going to the Credit Review Office and I would strongly encourage SMEs refused credit to seek a review by the Office. I find it difficult to understand why SMEs and farms who are at risk of going out of business are not willing to seek a review of a refusal of credit.

The independent assessment contained a number of recommendations to make the CRO more effective in encouraging and increasing the supply of credit to SMEs. One of these recommendations was to increase the resources of the CRO and I sanctioned the appointment of additional reviewers at budget time last year. The recent CRO report stated that the procurement process for additional reviewers has been completed and that the implementation of the remaining recommendations in the assessment within the CRO’s remit would follow the training of these reviewers. I am satisfied that the CRO now has sufficient resources to fulfil its mandate of encouraging and increasing the supply of credit to SMEs. In looking at the implementation of other recommendations, my officials have also been considering where the CRO should fit into the overall strategy of ensuring credit availability for viable SMEs and the level of resources is one aspect of this strategy. I expect that the deliberative process on the strategy will conclude shortly.

Tobacco Smuggling

Ceisteanna (209)

Seán Kenny

Ceist:

209. Deputy Seán Kenny asked the Minister for Finance if the Revenue Commissioners plan to have a confidential e-mail address for members of the public to report illegal cigarettes smuggling; and if he will make a statement on the matter. [31741/13]

Freagraí scríofa

Minister for Finance

I am advised that the Revenue Commissioners are in the process of reviewing their confidential channels available to the public to report illegal activity in relation to tobacco, including smuggling and illegal selling. The provision of a confidential email address is one option which is under consideration. I am also advised that Revenue have a confidential tobacco telephone/hotline that is available on a 24-hour basis. Members of the public are encouraged to contact this hotline [phone] with any information pertaining to illegal activity.

Question No. 210 answered with Question No. 98.

Tax Yield

Ceisteanna (211)

Pearse Doherty

Ceist:

211. Deputy Pearse Doherty asked the Minister for Finance the total taxable profits of companies here in 2012 and the corporation tax paid that year, in value and as a percentage. [31756/13]

Freagraí scríofa

Minister for Finance

I am informed by the Revenue Commissioners that statistical data is not yet available for the year 2012 as corporation returns associated with 2012 accounting periods are not yet due in many cases.

Tax Yield

Ceisteanna (212)

Pearse Doherty

Ceist:

212. Deputy Pearse Doherty asked the Minister for Finance if he has considered setting a minimum threshold for profits to be retained here for corporation tax purposes, if the company is incorporated here and or resident for tax purposes. [31757/13]

Freagraí scríofa

Minister for Finance

Companies incorporated or resident in the State for tax purpose are chargeable to corporation tax on all of the profits arising from their trading activities here after taking account of allowable deductions and reliefs as provided for in the Taxes Consolidation Act 1997. Dividends and other distributions are not deductible in computing profits for tax purposes: whether a company retains its profits or distributes them to its shareholders or parent company does not affect the amount of those profits that is chargeable to corporation tax, and I am assuming that this is not what the Deputy has in mind. Setting a minimum threshold of profits for corporation tax purposes would involve restricting deductible amounts, in respect of what would otherwise be allowable deductions and reliefs, to a percentage of profits before those deductions and reliefs. For companies whose net taxable profits would otherwise be below such a threshold, imposing such a cap on the aggregate amount of deductions and allowances would effectively increase the rate of tax above 12.5%. I do not believe that such an approach would provide a suitable basis for taxing company profits or that it would be a desirable option in the context of our 12.5% corporation tax regime and its important role in generating investment and jobs in the economy.

Question No. 213 answered with Question No. 205.

Banking Sector Issues

Ceisteanna (214)

Peadar Tóibín

Ceist:

214. Deputy Peadar Tóibín asked the Minister for Finance if he will outline the impact of change in cash handling charges on enterprises; and if he will consider developing a guide to banking costs including cost comparisons between the pillar banks. [24452/13]

Freagraí scríofa

Minister for Finance

As the Deputy will be aware the Relationship Frameworks with the banks provide that the State will not intervene in the day-to-day operations of the banks or their management decisions. These frameworks are published on the Department of Finance website. I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure the value of the banks as an asset to the State, as per the Memorandum on Economic and Financial Policies agreed with the EU Commission, the ECB and the IMF. However, AIB has informed me of the following: "While AIB’s standard notes lodged fee is one of the most competitive in the market, we are aware that the above changes will impact on c. 5% of our business customers."

Changes to European Regulations in 2011 have meant that AIB is now obliged to check cash lodgements for fitness and authenticity before lodgement to the Central Bank. Historically, AIB was one of the only banks to offer a discount to some of its business customers who prepared lodgements to an agreed standard. This removed the requirement to check the cash in such lodgements and thus allowed for reduced cash handling/notes lodged rates (€0.25 and €0.17) off the standard €0.45c per €100 fee. As a result of the manual nature now involved in checking-counting cash, a review has taken place of AIB’s historical cash handling fees.

In this regard, we have written to all impacted customers offering them the opportunity to approach the Bank to discuss their transaction fee arrangements in advance of the next fee charging period. These discussions and any potential revised fee negotiation and transaction fee arrangements can be put in place up to 30th August next and back dated to the start of that fee quarter. AIB’s business customers often negotiate individual fee arrangements based on their specific circumstances and needs, and the bank is offering them the opportunity to do so in the coming months in order to minimise the impact of the above changes.

More broadly, there may be opportunities for business customers to reduce their overall cash handling and fees through some electronic banking services such as:

- AIB’s Point of Sale systems

- AIB has also launched its ‘contactless payment’ service for transactions up to €15 which involves customers holding their card up to a secure reader which records the transaction in seconds

- For business customers with larger cash lodgement requirements, the use of AIB’s centralised Lodgement Processing may reduce costs

- In-store ATMs offer the ability to recycle cash and which may reduce cash lodgement costs.

In the case of Bank of Ireland I have been informed that with effect from 8 April 2013, the Bank has changed how it accepts coin lodgements from its business customers. The changes include:

- Only full sachets/sacks of coin will be accepted for lodgement or withdrawal

- In addition, coin will not be accepted in priority lodgement bags or nightsafe wallets

- Cash in transit services must be used for bulk coin lodgement.

Bank of Ireland has indicated that it will continue to offer its business customers the opportunity for more efficient day-to-day banking. The Bank has indicated it remains committed to communities nationwide and this change will ultimately deliver an enhanced customer experience and provide greater access to branch staff and their expertise for more complex transactions. The bank has indicated it will be working closely with its customers to ensure an easy transition. With regard to developing a guide to banking costs including cost comparisons between the pillar banks it would not be appropriate for my department to undertake this activity.