Banks which refuse to pass on ECB interest rate reductions to mortgage customers should “reconsider their position” or face legislation that will force them to do so, the Tánaiste Eamon Gilmore has warned.
His comments, come just days after Allied Irish Banks succumbed to pressure and announced it would be passing in the latest 0.25% cut to their customers.
Gilmore rejected claims that he and Taoiseach Enda Kenny had been too polite in a meeting with three banks on Wednesday at which the financial institutions refused to drop the mortgage interest rate.
The Tánaiste said the ECB decided to cut interest rates to ease pressure on consumers and stimulate spending. They did not envisage the banks pocketing the cut.
He said the banks had a “period of time” to reflect on their positions and warned that the Government “will take action as appropriate” if they persisted.
Last week AIB reluctantly announced it was going to pass on the rate cut to its customers on a variable rate. Earlier in the week the bank’s chairman insisted said it would not be passing on the cut because bank had not increased rates when they were raised by the ECB on two occasions this year.
EBS, Permanent TSB, KBC and former Irish Nationwide have already announced that their customers will benefit from the ECB's decision.
However both Ulster Bank and Bank of Ireland have not passed the rate cut on to customers.
The Government has again asked Bank of Ireland and Ulster Bank to reconsider their position on passing on the latest ECB rate cut.
Mr Gilmore said the Government is waiting for a report from the Financial Regulator on the issue and if the banks still have not responded, they will look at legislation to force them to pass on interest rate cuts.
Mr Gilmore was speaking at a Labour Women National Conference in Dublin.
