herald

Saturday 20 October 2018

Donohoe threat to banks if tracker loan crisis not sorted by Christmas

Finance Minister Paschal Donohoe
Finance Minister Paschal Donohoe
Michael McGrath

A hike in the bank levy is just one of the penalties the Government could slap on banks if people affected by the tracker mortgage scandal are not compensated by Christmas.

Finance Minister Paschal Donohoe said there will be no discussion about lifting the ban on bonuses and the €500,000 cap on bankers' pay until all tracker cases are settled.

Despite some estimates that the number of people wrongly denied a tracker rate could reach 30,000, the minister insisted the final figure will be closer to 20,000.

However, Fianna Fail's Michael McGrath last night told the Dail: "An unknown number, if the truth be known, have been living with this nightmare for up to a decade."

He criticised the minister's response and said he had no confidence that the problem would be resolved in the timelines outlined.

"The bankers who caused this will sleep well tonight. But the people whose lives they devastated will be sleepless because their nightmare continues," he said.

After two days of meetings with AIB, Bank of Ireland, KBC, Permanent TSB and Ulster Bank, Mr Donohoe said: "This is a scandal. It should never have happened and the Government is determined to ensure that it should be resolved."

Deadline

Most cases should reach a conclusion by the end of the year - but Ulster Bank will not be in a position to clean up its books until June.

Mr Donohoe has asked the Central Bank to report by mid-December on whether each bank is meeting its deadline.

"I will hold chief executives accountable for achieving these timelines," he said. If satisfactory progress is not made, a range of policy measures are available.

These include introducing new laws requiring stricter reporting for all retail banks; amending tax law in a targeted way; and targeted actions as a shareholder in AIB, Bank of Ireland and PTSB.

"I hope not to have to pursue these options but if the Central Bank cannot indicate that the issues are resolved, these are actions that I will take," said Mr Donohoe.

He refused to say exactly what the "target actions" would involve but said it was open to him to submit resolutions at an AGM.

He defended the work of the Central Bank, saying it had carried out a "very large and very significant investigation".

Confidence

Despite the criticism of Governor Philip Lane for his performance before an Oireachtas committee last week, the minister said he had "absolute confidence" in the bank.

Mr Donohoe has also asked the Central Bank to prepare a report on the current cultures and behaviours and the associated risks in the retail banks today and the actions that may be taken to ensure that banks prioritise customer interests in the future".

Promoted articles

Entertainment News