Borrowing costs ‘threaten margins’

HIGHER borrowing costs in European money markets are threatening to erode lending margins, Irish Life & Permanent chief executive officer Denis Casey said.

The rate banks charge each other to borrow euros for three months, the euro area inter-bank offered rate, has climbed 0.5% since the beginning of August to a six-year high of 4.82%.

“The persistence of current high Euribor rates would begin to have some impact on the margin on the bank’s loan book if it persisted beyond the next six to eight weeks,” Mr Casey said in a meeting with Goodbody Stockbrokers in Dublin.