Press coverage of BoI at Oireachtas Finance Committee

Dublin-based TD [broken link removed] accused him of “serious profiteering” by charging up to 4.5 per cent for its standard variable rate (SVR) when its cost of funding was 1.15 per cent for the six months to the end of June 2014, and at a time when [broken link removed] is set to cut its rate by 0.25 percentage points from December 1st. ..

Earlier, Fianna Fáil’s Michael McGrath and Fine Gael’s Kieran O’Donnell asked Mr Boucher how then was Bank of Ireland able to charge a fixed rate in Northern Ireland of only about 2 per cent.
Mr Boucher said this was a special offer reflecting market conditions there and noted Bank of Ireland pays the 1 per cent stamp duty for first-time buyers in the Republic.

Click to expand...

Bank of Ireland chief executive [broken link removed] told a parliamentary committee yesterday that the group won’t “slavishly follow the strategies of other banks” in cutting rates, because the margin it makes on these mortgages is not “exorbitant”.
Tell that to homeowners on Bank of Ireland variabl- rate mortages, who are paying considerably over the odds for their home loans even though in Europe mortgage-holders are benefiting considerably from historically low European interest rates.
In France, for example, variable-rate mortgages can be taken out at about 2.5 per cent.

Click to expand...

Meanwhile Mr Boucher received criticism for the rates it levies on its existing mortgage customers.
Fianna Fáil’s Michael McGrath said the cost of funding had reduced substantially in recent times but the bank’s standard variable rates had not fallen in six years.


Mr McGrath asked how the bank could justify the rate, particularly when compared to what was available to customers in Northern Ireland.
Mr Boucher said the margin the bank made on these loans was not exorbitant, and it was providing mortgages with significant liquidity risks.

Click to expand...

However, he could play his part by lowering his bank's very high variable mortgage rates.
His borrowers are paying interest that are almost twice those in the rest of the eurozone.
AIB has shown the way for Mr Boucher on interest rates.

Click to expand...

There are currently no plans to reduce Bank of Ireland’s standard variable mortgage rate following AIB’s 0.25% cut, although the situation is under review, according to chief executive Richie Boucher.
Speaking to the Oireachtas Finance Committee yesterday, Mr Boucher noted that AIB owes the taxpayer €20bn. “It is their decision how they use that money,” he said.
AIB announced last Thursday that it was cutting its standard variable rate mortgage by 0.25% to 4.15%. Bank of Ireland has not reduced its standard variable rate mortgage since 2009.
However, Mr Boucher denied a claim by Fianna Fáil TD Michael McGrath that the bank was “profiteering” from ordinary customers.
Mr McGrath said Bank of Ireland was charging 4.5% for the standard variable rate mortgage yet its cost of funding had dropped to roughly 1.15%. Moreover, Bank of Ireland was offering much more competitive rates in Northern Ireland and Britain, Mr McGrath added.

Click to expand...

Brendan Burgess said:

Did anyone hear if it was covered on radio or TV?

Click to expand...

The ECB then left its main refinancing rate at just 0.05pc.
This prompted calls for more banks to follow the lead of AIB and cut variable rates.
AIB last week sliced up to 0.25pc off its variable and loan-to-value rates.
But Bank of Ireland boss Richie Boucher told legislators this week he had no intention of playing "follow-the-leader" with AIB, and rejected accusations his bank was profiteering.

Click to expand...