Eurostat figures show Irish banks charge an average of 8.07% on multi-year loans compared to a low of 4.74% in Finland and the second dearest rate of 7.42% in Greece.
A spokesman for Bank of Ireland said they do not know how Eurostat, the European central statistics office, arrived at the 8.07% figure, saying a large proportion of their rates to business were at the ECB rate of 2% plus 1.75%. He pointed out they have an unsecured business rate on loans up to 65,000 of 4.75%.
“Our interest rate margin across all businesses is 2.3% and just 1.2% on mortgages,” he said.
A spokeswoman for AIB said their rates to business are far below the rates quoted in the Eurostat survey, but said until they receive clarification from Eurostat on the figures they could not comment.
The raw data on interest rates is supplied to Eurostat by the European Central Bank who receive information in the first instance from the Irish Central Bank (ICB). An ICB spokesperson said comparing the figures on a country by country basis was dangerous as commercial loans can mean different things in different jurisdictions.
The Irish Bankers Federation (IBF) said the author of the Eurostat report qualified his report by saying currently available statistics cannot be used to compare interest rates in different countries.
“The Central Bank and Financial Services Authority of Ireland share our concerns about the lack of harmonisation in the data furnished by national central banks to the ECB, and in discussions with the IBF earlier this year, advised that steps are being taken to address the problem. The Central Bank expects that, as and from September 2003, a new harmonised system will be in place,” the IBF said in a statement.
The IBF believe the fully harmonised data will show Irish lending rates to small and medium sized enterprises to be competitive by European standards.
However, Davy Stockbrokers analyst Scott Rankin that with a Competition Authority study underway, this is not the kind of research banks will be keen to see.
“We believe the study could have financial implications, most likely for AIB and Bank of Ireland, though any remedies are only likely to have a modest impact,” he said.