The Irish bank industry has "sucked the juice" out of the Irish people and out of the economy, the Consumer Association said today.
The association's Mr Eddie Hobbs said AIB and Bank of Ireland had recorded massive profits due to a restrictive banking system. He was speaking after a JP Morgan study showed that AIB and Bank of Ireland were making three times as much profit as their European counterparts.
"The banks have done well, of course they have done well," Mr Hobbs said. "Any idiot can run a business if it's in a highly restricted market and do very well.
"I'm not suggesting banks are run by idiots but if you have highly restricted market with barriers to entry it's very easy to make a lot of profit.
"The defence that we have some form of DNA that we produce absolutely brilliant bankers just doesn't wash."
Mr Hobbs said the report was further proof, if needed, that banks were only concerned about profits and ignored customer welfare.
"This study along with numerous others has shown that really the juice has been sucked out of the Irish people, and out of the Irish economy, by bank systems and has been sucked out through a restricted market," Mr Hobbs said. "There's a big difference between profits and premium profits."
Government studies from 2000-01 and IFSRA reports have both shown that people are paying more than the European average for banking services, he claimed.
The report comes at a bad time for the sector after officials called for a root-and-branch review of the sector to prevent corruption and further scandals.
JP Morgan studied the 2003 financial year when AIB made pre-tax profits of €1.011 billion and Bank of Ireland earned pre-tax profits of €1.13 billion.
Mr Hobbs claimed competition laws had not been properly applied to enforce an overhaul of the sector and create a free and open market. He called for easier access to capital, a free and open market and closer involvement by the financial regulator to overhaul the industry.
Fine Gael's finance spokesman, Mr Richard Bruton, said: "It is several years since both the Taoiseach and the Tánaiste promised to address competition in the banking sector.
"The Government's response was a stream of reports and no concrete action. Over many years the relationship between the Central Bank and the banking sector has been too cosy. The Central Bank did little to promote competitiveness in the banking sector, and to end excessive profiteering."
Small and medium business lobby group ISME said the study's findings merely confirmed "the dogs on the streets" already knew.
"The reality is that the banks have been allowed by the various authorities to ride roughshod over small business owners by turning a blind eye to their discriminatory treatment of the small business community over the years, in the level of hidden charges, interest, and services," it said in a statement.
