Bank of Ireland chief executive Richie Boucher at a recent briefing with journalists described this is one of the big issues facing the banks.
His problem is that the so-called "net interest margin" is not in their favour. They are paying out more than they are getting in on a stagnant loan book which includes loss-making tracker mortgages.
"Deposit pricing is red hot in the Irish market," said Boucher. "It is going to be impossible to maintain deposit pricing," he added.
Bank of Ireland is offering ordinary savings account holders rates of 3.25% and an eye-watering rate of 6% in a "double your interest rate" deal for those who leave their money on deposit for two years.
Irish savings rates almost double UK rates
This compares with best buys for ordinary savers in the UK which are listed in today's Guardian as Nationwide Building Society with a 3.05% interest rate, ING Direct at 3% and Tesco at 2.9%.
No wonder Irish savings are at record levels – around €93bn.
The question is, if the rates are unsustainable, won't they disappear? Not this side of Christmas, says Dolmen Securities banking analyst Oliver Gilvarry.
At some time, the Irish Banks are going to have to wake up and stop paying these ridiculous rates for deposits. That will only be the case when they are seen to be viable organisations outside of state support/bail-out. With a balance sheet stuffed with long-term loss-making tracker mortgages that won't be any time soon.
Guess they've not been following NAMA Wine Lake or umm, any Irish news source these past monthsNo wonder Irish savings are at record levels – around €93bn.
whos trying to discourage the practice of saving? Thats a bit of a stupid statement!
Ask yourself if these rates are too high where do they get the money to pay the interest.... Oh yes from us through the higher tax we are paying..
so they give you an extra 3% and have taken the other 20% off us all in higher taxes.
The banks need cash, apparently. But it seems people are awfully selective about how they get it.
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