Rabbitte: Banks milking customers for profit

People are being milked by Irish banks to make higher profits, it was claimed in the Dáil today.

As AIB posted €1.7bn profits, Labour leader Pat Rabbitte claimed Irish banks were making three times more money per customer compared to their counterparts in the EU.

However Taoiseach Bertie Ahern said there was nothing wrong with profitable Irish companies but added that badly-needed competition in the sector was increasing.

Mr Rabbitte said of AIB: “This is the highest rate of profit in Europe.

“Obviously some of this profit-taking is excessive in the Irish economy.

“It’s good to see the banks profitable but any reasonable person will say that it is completely out of kilter with the financial sector in Europe.”

AIB chief executive Eugene Sheehy today said that half the bank’s profit had been made in its overseas divisions.

Profit from its Irish operation increased by 24% to €779m.

This excluded the €50m the bank had to set aside to compensate customers it overcharged over a number of years for foreign exchange.

Mr Rabbitte called on the Government to reinstate the banking levy, introduced by former Finance Minister Charlie McCreevy in 2002 and discontinued in December’s Budget.

Mr Ahern agreed that the banks were making high profits but he said there was more competition in the market now with Bank of Scotland, An Post’s financial services and credit unions.

Mr Rabbitte replied: “Hundreds of thousands of bank customers are milked in order to contribute to excessive profits.”

He gave the example of a 19-year-old apprentice carpenter in his constituency who went into a bank looking for a €4,000 top-up on his €8,000 loan, but the bank would only offer him €20,000.

“He was only 19 with no concept of the responsibility of what this means,” Mr Rabbitte added.

Mr Ahern claimed that there had been a serious threat in the past that Ireland’s top banks could be taken over by foreign companies and this threat had now receded with increased profitability.

He added: “If you go in to cash a cheque sometimes you will end up getting a car loan. I don’t agree with that.

“The banks have the resources and are all the time targeting people to take out money.

“If the banks weren’t in this country, they would be somewhere else.”

“Let’s stop the begrudging attitude.”

Mr Rabbitte cited the last Central Bank quarterly report which said that personal debt levels, which were increasing at three times the rate of income, were unsustainable.

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