Minister for Finance Michael McGrath has said he expects an imminent move by Irish banks to boost bank deposit rates. Speaking during the opening of a new hospital development in Cork, Mr McGrath said that members of the public were “absolutely entitled” to make financial decisions in their own best interests.
This follows comments made by Minister for Public Expenditure Paschal Donohoe last week that it was not “unpatriotic” for savers in Ireland to put their savings in other European bank accounts if they can get a better deal there.
However, Mr McGrath said that he believed Irish savers would soon receive positive news on bank deposit rates. “I do anticipate that we will see increases in the weeks ahead in the rates of interest being paid by banks on certain savings and deposit accounts.
“I think the market conditions are such that such increases are justified. They are commercial decisions for the banks but I certainly expect and anticipate that we will see improvements in the rates being paid over the weeks ahead. While the banks have not fully passed on the increases in interest rates to mortgage holders, they have passed on even less of the increase in the ECB interest rate to savers and depositors. I do think that mismatch will now be addressed. We will see progress on that over the coming weeks.”
Mr McGrath also said he has had discussions with the National Treasury Management Agency (NTMA) which is responsible for various State saving products.
“I know that they intend to bring a proposal to their own board next week which will then make its way ultimately to me for sanction – that will involve an improvement in the rates of return being paid on some of the State savings products being offered by the NTMA. I do think we will see progress in the future in the coming weeks on both of those fronts.”
Irish banks offer their saving customers among the lowest interest rates in Europe, whilst European rates can be multiples of those available to savers in Ireland.
The Irish Times asked the three main banks – Bank of Ireland, AIB and Permanent TSB – if talks had taken place with Mr McGrath, whether any assurances had been offered in relation to interest rates, and, if so, what the timetable is for implementation.
In response none of the banks made any commitment to increase interest rates, but instead pledged to keep them “under review”.
A spokesman for Bank of Ireland outlined a number of measures it has taken to improve its savings products and deposit offerings for customers since the ECB’s rate hikes between July 2022 and July this year.
A spokesman for AIB said the bank has taken a “very measured approach in an evolving interest rate environment”. He said the bank has not passed on all of the ECB rate increases to its mortgage customers, although the Irish banks were catching up with their European counterparts in that regard. “In the context of deposits, AIB insulated the vast majority of our deposit customers during a sustained period of European negative interest rates over eight years.”
A spokeswoman for Permanent TSB said: “We have no comment on that topic. As always, we keep our rates under review.”
The Banking and Payments Federation Ireland (BPFI), which is the lobby group for the banks, was asked the same questions. It said: “The interest rates that banks charge for loans and pay for deposits are a competitive matter for individual banks, and BPFI does not have a role as to how these rates are decided on.”
