Banks to pay over €3m more for Army escorts

The main banks are to pay the Government over €3 million more for military escorts for cash transits, it emerged last night.

Minister for Defence Willie O'Dea said he had secured a deal with the Irish Bankers' Federation under which the banks will have to pay for every cash escort provided by the Army.

The new deal will be worth at least €3 million more to the Government but this figure could be higher depending on the number of cash escorts.

The deal will come into force in October. However, in the interim, the banks will pay the Government around €1 million in an additional once-off fee to cover the higher charges for the period until the new agreement comes into operation.

At present the banks pay the Department of Defence around €2.8 million annually towards the cost of military escorts for cash transits.

This represents around 42 per cent of the total cost to the Army of providing this service.

The Department of Defence has estimated the total cost to the Army of providing military escorts for cash transits is around €6.7 million each year.

However, around 20 per cent of this is incurred in escorting money being taken to post offices around the country.

Since his appointment last autumn Mr O'Dea has said on several occasions that he wanted to see the banks pay more for military escorts. The Minister had pointed out that the amount, which the banks were paying the Department of Defence, was out of line with the amount they had to pay the Department of Justice for the provision of Garda escorts for money being transferred around the country.

In a statement last night Mr O'Dea said the existing deal on charges with the banks, which had dated back to 1995, was "unsustainable".

He said it had been "an absolute priority" for him to terminate this arrangement and devise a new and more cost effective one.

The negotiations with the banks had been exhaustive but he was delighted at the outcome of the new deal.

Mr O'Dea said that under the new arrangement the banks will be billed at the end of each year for every single cash escort provided by the Army.

"In any given month at least 1,600 Army man-days are spent on providing cash escorts.

"In 2003 - most recent full year figures available - the Army protected 2,335 escorts. Around 80 per cent of these covered deliveries to banks . The other 20 per cent were to post offices," Mr O'Dea said last night.

Since my appointment as Minister I was determined to introduce a system whereby the banks would be billed per escort - full costs - and today I am pleased to announce that this is exactly what I have secured following months of exhaustive negotiations," he said.