Plans are in preparation to invite representatives of the banking industry before the Oireachtas Committee on Finance, Public Expenditure and Reform, as further criticism is levelled at banks for not passing on interest rate increases to savers.
Chairman of the Oireachtas Finance Committee Deputy John McGuinness said today it was time to manage the banks in the interest of society.
He accused the Government, the Central Bank and the European Central Bank of not giving leadership in this area.
Speaking on RTÉ's Morning Ireland, he suggested that the bank levy should be extended and increased and that - should the banks not comply with the Government's desire to have higher interest rates for depositors - they should then be sanctioned.
Deputy McGuinness said that pressure from Government is essential to achieve fairness in the sector.
He said that the Central Bank seems to be standing to one side, while the ECB is not giving any leadership on this. He added that Italy and Spain are looking at how to force the banks to respond.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
"The minister and Cabinet can indicate to the Central Bank what's required here - and tell the banks it's time that they acknowledge the fact that the interest rates on deposits are at such a low level, while the interest rates are going to 8% or 9%," he said.
"It's time to look at the bank levy itself as a means to penalise banks that find themselves in this position," he added.
"Extend and increase it right across the sector, hold a threat over the banks that should they not comply with the Government's desire to have higher interest rates for depositors that they would then be sanctioned," he suggested.
"We have to take into consideration that vulture funds now form a big part of the Irish financial system, they must be included in whatever action is going to be taken by the Government in the future," he stated.
"People now paying substantially more for their mortgages than before, and those that have money on deposit are being paid far less... The banks are making substantial profits, it is absolutely obscene that the Government and the Central Bank would stand by while this is happening," he told Morning Ireland.
We need your consent to load this rte-player contentWe use rte-player to manage extra content that can set cookies on your device and collect data about your activity. Please review their details and accept them to load the content.Manage Preferences
Sinn Féin member of the Oireachtas Finance Committee, Rose Conway-Walsh, said that she agrees with the minister's comments regarding banks and deposit rates, but she added that Minister Harris and Government was turning its back on households struggling with the escalating mortgage interest rates, which she said shows an absolute dysfunction in Government.
Speaking on RTÉ's Today with Philip Boucher Hayes, she suggested that the Minister for Finance convene a meeting with the Central Bank and retail banks to charter a way forward.
"Why aren't they sitting down and doing something about this," she said.
Ms Conway-Walsh added that she looked forward to having the banks come before the Oireachtas Committee, as she had serious questions to put to them but also felt they could not wait until then, as something needs to be done before that.
"Minister Harris should be knocking on the door of Leo Varadkar, Michael McGrath and others in Government to say that this is too serious to just be spectators in the situation," she said.
Minister for Finance Michael McGrath has confirmed that the bank levy will be extended as part of Budget 2024. The measure, which has been in place since 2014, was introduced in the wake of the global financial crisis and was designed to ensure that banks made a contribution to the recovery of the economy after the bailout.
Mr McGuinness said banks and any other entity where deposits are held, should pass on the benefits of the interest rate hikes to depositors as that is an essential part of fair banking.
He added that Ireland can still attract new banks and empower credit unions further.
