‘Greedy’ banks attacked as AIB nets record €1.7bn profit

IRISH banks wring three times more profit from their customers than other banks in Europe.

Labour leader Pat Rabbitte accused the banks of greed yesterday as AIB announced record profits of €1.7 billion for 2005 - or €6.8 million every working day. Profits were up 25% on the year before. Almost €780m, or 45%, came from AIB’s customers in Ireland.

Speaking in the Dáil, a critical Mr Rabbitte said: “This is the highest rate of profitability in Europe. The two major Irish banks take three times more in profit per customer than the average bank in Europe. It is obvious some of this is excessive profit-taking. There is a lack of competition.

“It is good to see the banks profitable but any reasonable person would say a profit of €1.7bn is completely out of kilter with the financial sectors in other countries in Europe.”

Irish banks were ripping off customers and the Government ought to restore the €100m levy on the banks, he said.

Mr Rabbitte’s remarks drew upon a JP Morgan survey showing Ireland’s banks made three times as much per customer than their European counterparts.

Mr Rabbitte said: “Hundreds of thousands of ordinary bank customers are being milked to contribute to excessive profits.”

Taoiseach Bertie Ahern defended AIB, though he conceded greater competition was needed.

Amid constant interruptions, Mr Ahern said: “I am glad AIB is profitable. It is so because growth in the economy is so strong and our businesses are so strong.”

He said there was more competition with the arrival of the Bank of Scotland, An Post’s financial services and credit unions.

The €100m levy scheme had stopped in accordance with an agreement between the banks and the Government, he said.

Last night, the Consumers Association of Ireland (CAI) urged the Government to ensure greater competition.

CAI chief executive Dermott Jewell called for a “determined effort” from the Competition Authority to break the stranglehold of the big banks in Ireland.

AIB needed to reward those whose business had helped the bank achieve the record profits, he added.

But AIB chief executive Eugene Sheehy said 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 overcharged for foreign exchange services.

The Irish Bankers’ Federation said banks were profitable and efficient, but were also competitively strong by international standards.