Retail banks misinformed ministers on payment break interest at May 11th meeting – Pearse Doherty TD
Sinn Féin spokesperson on Finance Pearse Doherty TD has criticised the retail banks for wilfully misinforming government ministers regarding the charging of interest on payment breaks at a meeting held on May 11th.
The Donegal TD was commenting after a story in the Business Post by Aiden Corkery reported that the five retail banks told former Taoiseach Leo Varadkar and Minister for Finance Paschal Donohoe that the regulator required banks to charge interest on Covid-19 payment breaks when this is not the case.
Speaking today, Teachta Doherty said: “A story in yesterday’s Business Post reported minutes of a meeting held on May 11th between the five retail banks, the Banking and Payments Federation, the Minister for Finance and then Taoiseach Leo Varadkar.
“During the meeting, banks misinformed ministers that the regulator required them to charge additional interest on payment breaks issued in the context of Covid-19.
“This was and is not true.
“It is disturbing to read that Bank of Ireland and AIB in particular, of which the state is majority shareholder, openly misled senior ministers over such a serious issue, which will affect tens of thousands of borrowers.
“Since March 18th, almost 80,000 mortgage-holders have taken a payment break because of income loss due to Covid-19.
“For every one of them, interest will be charged over the payment break period, increasing their repayments and outstanding balance by up to €4,000.
“This will increase debt for borrowers who are already financially vulnerable as a result of this crisis.
“At this meeting on May 11th, the banks told ministers that the regulator required this additional interest to be charged. This is demonstrably false.
“In several EU member states, banks are not charging interest for mortgage payment breaks, in full compliance with the European Banking Authority Guidelines. This is an issue I have repeatedly raised since March.
“If you are a KBC customer in Belgium, you can apply for a payment break on your mortgage without being charged additional interest. If you are a KBC customer here, you will be.
“On June 22nd, I received correspondence from the Central Bank confirming that the regulator allows payment breaks to be applied whereby interest does not accrue during the break period, directly contradicting the words of the banks at this meeting with senior government ministers.
“It is simply not credible that Sinn Féin knew this and the five retail banks did not.
“It is unclear which is more disturbing; that the banks so flagrantly misinformed senior government ministers, or that the Minister for Finance believed them without doing his homework.
“I will be raising this as a matter of urgency with the Central Bank."