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Banks not contributing to society – Elderfield – Irish, Business – Independent.ie
BANKS had been given a life-saving blood transfusion by taxpayers but returned the favour by charging customers more, the financial regulator has said.
The country’s top regulator, Matthew Elderfield, also accused the banks of not properly contributing to society.
His comments came on the day it emerged that Bank of Ireland is to push up the interest on credit cards by as much as 4 percentage points, in a move that will hit thousands of householders. Many struggling consumers are so short of cash they are using credit cards to juggle their finances.
The new rates, which will be between 0.7pc and 4pc higher, take effect from December 18 next. They apply to purchases on cards. The bank, which got €4.7bn from the taxpayer, said it had not raised rates since August 2011.
Mr Elderfield, who is also the deputy governor of the Central Bank, said banks faced the uncomfortable task of “telling the neighbours who donated blood to them that they need to charge them more as customers”.
The State has nationalised five of the six domestic banks — AIB, EBS, Permanent TSB, Irish Nationwide and Anglo Irish Bank — at an overall cost of €64bn.
Mr Elderfield said returning to profitability was one of the key challenges the banks faced.
“Progress on profitability will only be possible in the interim due to gradual repricing of assets to reflect the cost of funds,” he said.
That implied further interest rate hikes, he said.
Critical
AIB has announced two hikes in its variable rates in quick succession. Bank of Ireland has hiked its variable rate by 0.5pc, while Permanent TSB has signalled a rise in fixed rates.
Speaking at an event in UCC, Mr Elderfield said the banks were out of the “critical ward following radical surgery and an extensive transfusion of blood from the Irish taxpayer”.
But, he said, they were still not contributing properly to society as they should and remained weak.
However, the central bank deputy governor confirmed that Ireland may be close to removing the banking guarantee that makes the State responsible for deposits kept in the bailed-out banks, confirming earlier reports in the Irish Independent.
“My view, we are getting close to the position where the changing circumstances arising from successful implementation of the IMF/EU programme and the introduction of the banking union should permit the full removal of the government guarantee,” he said.
In a clear reference to speeches earlier this week calling on the banks to face up to their mortgage problems, Mr Elderfield said the banks should be able to cope with losses even if they fully faced up to the problem.
Lenders had set aside “prudent provisions” for bad loans and retained a “healthy buffer” of additional capital, he said.
Banks wouldn’t know whether they had enough capital to withstand ”extreme loss developments” until they worked out what they could recover or needed to restructure among troubled loans, he said.
Lenders may be encouraged to hoard reserves and restrict lending until a “case-by-case re-underwriting” of soured loans was complete, he said.
via Banks not contributing to society – Elderfield – Irish, Business – Independent.ie.
via Banks not contributing to society – Elderfield – Irish, Business – Independent.ie.
Irish Life posts €96m in first half profits, ‘wrong’ time to sell company – Irish, Business – Independent.ie
RISH Life Assurance, the state-owned life assurer, said it is the wrong time to sell the company.
The insurer said today that “market conditions are not current conducive for a sale” but added that its priority is to return to private ownership and repay the state’s investment.
Irish Life is the largest private payer of pensions in the country with a market share of 29pc of the life and pensions market and more than 1m customers.
The company annouced today that pre-tax profits increased six-fold to €96m last year under International Financial Reporting Standards. The group’s embedded value, an estimate of a life assurer’s worth based on future profits of existing policyholders, was €1.8bn at the end of June.
Kevin Murphy, Irish Life chief executive officer, said the assurer is “very conscious” of its taxpayer support “and we are determined to ensure that this can be repaid fully as soon as practicable,” he said. He added that the Irish life and pensions market is likely to remain tough for a number of years.
Banks working on new plan to solve crisis
Top management in both AIB and Bank of Ireland are reading the Old Testament to get them out of the current economic crisis.
Apparently, they have heard it’s where prophets are to be found
If you are looking for a loan please do not walk into the bank with a copy of the New Testament as it is viewed with suspicion