Banks disregard public sentiment

I WISH to express my utter disgust at the way Permanent TSB (PTSB) has treated its variable rate mortgage holders by increasing its rates by 0.5%.

PTSB is blaming the increase on “commercial market realities, including the increased cost of accessing funds”.

This is the reality of the markets. PTSB is committed to maintaining profitability of behalf of its shareholders, but what about the reality that if the Government did not guarantee its deposits back in September, there might not be a PTSB. What about the reality that allowed key PTSB executives to authorise the transfer of huge sums to Anglo Irish Bank bank in the middle of a liquidity crisis without the board’s knowledge or approval and no one has been brought before the courts.

The problems at Irish Life and Permanent (PTSB’s parent company) derive from its excessive reliance on the wholesale market to fund its mortgage book.

However, these funding pressures should have been eased by the Government guarantee. Also PTSB managed to tap the European Central Bank’s emergency liquidity window to provide it with as much as €14bn in funding last year.

At present, PTSB, along with all other major Irish lenders, is refusing to lend to first-time buyers, small enterprises or investors.

I appreciate banks must return to profitability to increase lending, etc, but how much profitability?

The banks are disregarding public sentiment because they don’t need the public anymore – they have the Government at their beck and call to inject billions into their balance sheets at the drop of a hat.

Finance Minister Lenihan’s refusal to condemn PTSB’s move other than to say it is “disappointing” is telling. The “commercial realities” are even more telling.

Rising variable rates are on the way across the rest of the banking sector. As there isn’t any demand for new mortgages, the other banks will not lose out on new customers by raising rates, so they can increase rates that will affect only existing customers.

Unfortunately, people are very slow to vote with their feet.

But that is the only way to express our anger to PTSB because, unfortunately, if you are in the position of having a variable rate mortgage with that company your options are extremely limited unless you are one of the small number of people in this country with a full-time, guaranteed job, with no other loans or commitments and a property that isn’t in negative equity.

Cllr Donie Daly

Ballyglavin

Youghal

Co Cork