Opposition demands action to protect bank customers
Concerns that AIB and Bank of Ireland will use dominant position to drive up costs
Sinn Féin finance spokesperson Pearse Doherty said Danske’s departure was another setback. Photograph: Alan Betson/The Irish Time
Arthur Beesley, Political News Editor
Danske’s move to close its business and personal lending operations comes only days after ACC Bank declared it will hand back its banking licence.
These developments will reinforce the position of Bank of Ireland and Allied Irish Banks. As a result, they have prompted demands from the Opposition and business and farming groups for Government action to protect the interest of customers.
The matter is sensitive as the State owns all but a handful of shares in AIB and retains a 15 per cent stake in BofI. As competition in the Irish market declines, there are concerns that the “big two” will be able to use their dominant position to drive up costs to the customer. After huge bailouts, both institutions are under pressure to return to profitability.
However, the Department of Finance indicated that the Government will not be intervening. The protection of customers was properly the responsibility of the Central Bank, said a spokesman for the Department.
“The Central Bank will be monitoring market conditions over the coming months. We don’t need to go any further than that,” he said.
“The banks have to operate in a commercial environment but at the same time the Central Bank has oversight in relation to all activities.”
Fianna Fáil finance spokesman Michael McGrath warned of an “effective duopoly” by BofI and AIB , a situation which exists when two parties control a particular market.
“Less banks means less competition and inevitably higher borrowing rates, increased charges and reduced rates for deposits for both business and personal customers,” Mr McGrath said.
“In recent years we have lost Halifax, PostBank, Irish Nationwide, ACC and now Danske is significantly reducing its presence. There has also been considerable foot dragging in respect of the restructuring of Permanent TSB.
“We need a positive response from the European Commission to the restructuring plan that was put to them and swift action is needed to ensure that Permanent TSB can be a significant player in the Irish banking market.”
Sinn Féin finance spokesperson Pearse Doherty said Danske’s departure was another setback and said it was clear that the Government was not facing up to a wider problem in the sector.
“The fact that the 150 job losses are likely to be compulsory is a hard blow to workers in a volatile sector. I urge Danske to engage fully with the IBOA.”