Dirt rise, bank levy ‘may breach’ State aid rules

The Government’s decision to introduce a bank levy and increase the Dirt tax in the budget could potentially breach EU State AID rules and seriously undermines the sector’s attempts to return to profitability, said the president of the Irish Banking Federation, John Reynolds.

At the time of the budget in October, the Minister for Finance, Michael Noonan, cited the banks’ “significant role” in causing the financial crisis as the rationale for imposing a bank levy that aims to generate €150m each year from all retail banks operating in the Republic.

Speaking at the IBF annual conference, Mr Reynolds acknowledged the banks’ culpability in the financial meltdown, which he attributed to poor lending decisions fuelled by an excessive use of wholesale funding.