Sir, – Minister for Further Education Simon Harris has stated that it is “offensive” for Irish banks to be “complete and utter laggards” when it comes to passing on increases in interest rates to savers (“Harris criticises banks over interest rates”, News, August 14th).
Is he prepared to use the same language in relation to the State Savings Schemes managed by the National Treasury Management Agency and more to the point what does he propose should be done to remedy the situation? With the exception of the 10-year National Solidarity Bond annual equivalent rate (AER) of 1.5 per cent, other State Savings products attract miserly interest rates with an AER of between 0.05 per cent (the deposit account interest rate, subject to deposit interest retention tax) and 0.98 per cent. – Yours, etc,
MICHAEL GRANT,
Lucan,
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Co Dublin.
Sir, – David McWilliams moved a bit further up my list of people to be admired with his article (“Irish banks are at it again, cheating savers out of their money”, Opinion, August 12th). His usual forthrightness and directness also indicate a very real level of anger shared by many. Reduced services, branches, staff and now this.
Rock on, David. – Yours, etc,
GERALDINE BIRD,
Doolin,
Co Clare.
Sir, – Rather than imposing a tax on the windfall profits being made by banks, as David McWilliams suggests in his column, the Government could spur competition for deposits by increasing the miserly rates offered by its suite of State Savings products. – Yours, etc,
AOIDHBHEN Ó CURRAOIN,
Terenure,
Dublin 6W.
Sir, – David McWilliams writes that our banks are “screwing the public” and “taking the mick” by paying close-to-zero interest rates on deposits while squeezing more of the burden of higher interest rates out of borrowers.
His suggested solution to the “cheating” of depositors is a windfall tax on excess profits. We may feel better that a share of the windfall profits is accruing to the insatiable exchequer rather than to bank shareholders. But it won’t put a cent of income in the accounts of depositors unless – and perhaps this is your columnist’s unstated thought – the threat or introduction of such a tax causes a change in bank behaviour.
On the second point, he acknowledges that banks operating in Ireland are dealing with a dysfunctional repossession regime. Interest rates charged by banks on home mortgages are half or less of what they can charge on unsecured personal loans. This is because lenders believe they have the security of a charge on the property they are financing. But that charge is virtually useless in the event that lenders need to enforce it.
David McWilliams points out that a bank going to court in Ireland to enforce its security is successful about 11 per cent of the time compared with an EU average of 46 per cent and a repossession success rate as high as 80 per cent to 90 per cent in countries such as Luxembourg and the Netherlands. And foreclosure in Ireland takes 42 to 81 months compared with 18 months in the UK, Denmark, Norway and Sweden.
Of course borrowers who pay their debts are paying through higher interest rates not only for themselves but also for borrowers who can’t or won’t pay and who continue to live in their homes rent- and interest-free.
David McWilliams’s suggested solution to this second problem is the introduction of legislation “that brings Irish foreclosure practices into line immediately with normal practice in Europe”. I wish him well with that one. We can legislate until the cows come home but lenders seeking to enforce their security will be be at the mercy not of the legislature but of the judiciary.
He further writes that the banks argue that they are prevented from doing “normal” business and that their best argument to substantiate that point is that no foreign bank will touch Ireland with a barge pole. It’s not a bad argument. Not only are we not seeing new foreign entrants to the land of bank super-profits but the few we had here have all headed for the door. – Yours, etc,
PAT O’BRIEN,
Rathmines,
Dublin 6.