Ireland’s reputation has not been damaged by Bank of Ireland’s major IT glitch and international headlines about queues at ATMs, Minister for Public Expenditure Paschal Donohoe has said.
The IT breakdown saw queues form at bank machines when it became apparent that customers were able to transfer up to €1,000 from their account even if they did not have the funds. Bank of Ireland has warned those customers that the funds will be debited and their credit ratings could be affected.
Mr Donohoe said what happened was “extremely serious and is of concern”, and that Minister for Finance Michael McGrath had asked the Central Bank to carry out an evaluation of the matter.
Asked at a press conference in Dublin if Ireland’s reputation had been damaged, Mr Donohoe replied: “I don’t believe that that as an issue is something that is in any way affecting our national reputation.”
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He said Irish banks have seen a “a significant recovery in their value over the last number of years”, and that was recognised by the global financial community.
Mr Donohoe was also asked about calls for mortgage interest relief to be introduced in the budget following a series of European Central Bank interest rate hikes designed to reduce inflation. He said inflation was coming down. “Getting to a place next year that we see inflation close to 3 per cent would make such a difference to the cost-of-living pressures that many are facing at the moment.”
Mr Donohoe said he appreciated the impact of the hikes on mortgage holders “But they are the kind of changes that are also playing a role in slowly seeing inflation fall across this year.”
He said any measures in relation to mortgage interest relief were a matter for Mr McGrath and the budget process, and he could not comment on what the outcome of those discussions would be. “I know Minister McGrath is weighing the matter up, and I’ll fully support any recommendation he reaches.”
[ What happens to people who withdrew money during Bank of Ireland’s tech meltdown?Opens in new window ]
At the weekend Minister for Higher Education Simon Harris criticised Irish banks as “complete and utter laggards” when it comes to passing on increases in interest rates to savers.
Mr Donohoe noted that Mr Harris made the remarks, and also said that Mr McGrath had said “the Government expects that interest rates and the benefits of interest rates are also shared with those who have deposits”.
He said the Government recognised it was a commercial decision for the banks and conceded that “the costs of new mortgages and the interest rates on new mortgages as well have not gone up with the same speed as they have elsewhere in Europe”.
Mr Donohoe also said “what I want to see happen here is competitive rates of interest be made available here to Irish savers”.
Separately Mr Donohoe was asked about reports that Minister for Children Roderic O’Gorman has cast doubt on the prospect of another 25 per cent cut in childcare costs in this year’s budget – as had been previously flagged.
Mr Donohoe said: “I think Minister O’Gorman was only recognising that no Minister at this point can give an indication of what they have secured in the budgetary process.” He said this was a “sensible approach”.
“He will be coming to me in a few weeks’ time making the case for his sector, and about what he wants to do in relation to childcare fees and everything else. We haven’t even had those discussions yet,” Mr Donohoe said.
He was speaking at the announcement of a plan to increase the amount of central purchasing arrangements in place for government departments with a view to getting “best value for money”. The public sector spends around €18.5 billion on goods, services and works each year. An average of €1.2 billion of this was through central purchasing arrangements in recent years.
Mr Donohoe said: “What we want to do is get to a level that the target level of expenditure for central solutions is around €4 billion per year.”
He said such arrangements cover “everything from paper clips, all the way up to heavy machinery”.
