BORROWERS REPAYING personal loans won't see the cost of their repayments falling any time soon, as most Irish banks have decided not to pass on the latest interest rate decrease from the European Central Bank (ECB).

This is despite calls from Minister for Finance Brian Lenihan for banks to meet the "legitimate financial needs of consumers and businesses".

Although banks have largely reduced variable rate mortgages in line with the ECB's 0.5 percentage point decrease, no action is being taken on personal loans, with ACC Bank a notable exception. It will pass on the full rate reduction to personal loan customers from November 20th.

AIB has decided not to pass on the latest cut to customers borrowing less than €30,000, even though it passed on the full 0.5 point cut in October. However, there will be a rate reduction for personal and business overdrafts, as well as all business lending.

While the ECB rate has dropped to 3.25 per cent, AIB borrows money for its personal loans business at the rate that banks borrow money from each other over three months. Although government interventions in the European banking sector have pushed this rate back from highs of more than 5 per cent to about 4.2 per cent, it is still out of line with the ECB rate.

Bank of Ireland has decided not to pass on the latest rate cut to personal loan customers, citing the higher cost of funding. However, the bank's rates on personal and business overdrafts will fall by 0.5 per cent. The rate on business loans has been cut to 9.5 per cent.

Ulster Bank and National Irish Bank are among the other banks not to have passed on the rate cut to personal loan customers.

One lender has increased its interest rates. GE Money raised rates on personal loans by 2 per cent on November 4th. The lender, which stopped offering new personal and commercial loans last August, said the increase was due to the higher cost of funding.

Mr Lenihan told a dinner hosted by the Institute of Bankers on Thursday evening that the Government was anxious to see commercial decision-making by the guaranteed lenders that is "shaped by the broader public policy objectives which have justified the support now being provided by the State under the guarantee".