Tánaiste: I have been very, very blunt with the banks on charges

‘Written in black and white’

LEO Varadkar has been put under pressure over the banks charging borrowers who avail of a Covid-payment break.

In March the country’s retail banks announced an optional payment break for clients impacted financially by the pandemic.

And new figures released yesterday show that 158,000 borrowers – of which about half are mortgage holders – availed of the break.

However, there has been ongoing controversy as to whether interest should be accrued during the break.

Tánaiste Mr Varadkar told the Dáil yesterday that it is ‘unacceptable’ for banks to take advantage of the crisis.

The former Taoiseach said he had been ‘very, very blunt with the banks’.

He said he told them that ‘if it turns out that you somehow make an additional profit out of this, or an additional premium out of this, that you somehow make more money out of this than you would have if the loan was paid back in time, that I would see that as serious.

‘We would come down on them like a ton of bricks. That is the fundamental thing that I need to find out over the next couple of weeks.’.

But Sinn Féin Finance spokesman Pearse Doherty said the Government had been ‘misled’ by the banks who had told the Government they were required to charge interest. On May 11, Mr Finance Minister Paschal Donohoe and former business minister Heather Humphreys attended a meeting with the chiefs of the five retail banks, along with Brian Hayes, the chief of the Payments Federation of Ireland, a lobby group for the banks.

A minute of the meeting shows Francesca McDonagh, CEO of Bank of Ireland, said ‘the sector is constrained by regulatory obligations’ and that ‘interest must be charged, as required by the regulator’.

The minute says: ‘Hayes noted that the approach being taken was the same across Europe and was in line with the rules banks were obliged to follow.’ However, Mr Varadkar said yesterday: ‘The banks never claimed they could not waive interest for the period and the representatives said it would be possible for them to waive interest for the period.’

Mr Doherty replied that it was written in black and white in those minutes that Bank of Ireland said this had to be done because the regulator had demanded it.

The Central Bank has confirmed there was no regulatory requirement to charge the interest.