Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar has said he does not fully trust the banks not to try to make a profit during the Covid-19 crisis.

Speaking on RTÉ's Business programme, Mr Varadkar said he had met the banks in May when they said they could not waive interest on mortgages that were paused due to Covid-19 because there was a regulatory barrier.

However, Mr Varadkar said it has since been clarified that was not the case and he had checked it with the Central Bank.

He said the other reason banks gave was that if they extend the term of a loan, there are costs associated with that for the banks.

Mr Varadkar said he accepted that the cost had to be borne by somebody, however, he said it should not be borne by the taxpayer.

"The question that I have a bigger concern about is could banks and other lenders be trying to somehow, you know, be trying to make an additional profit out of this?", Mr Varadkar said.

Asked if he believed they were, he said: "Like they have form, that is the truth of this, and we have seen the tracker mortgage scandal that is still ongoing and we saw previous scandals in the past.

"When you tend to meet them, banks like to talk you down with regulatory gobbledygook, unfortunately my assumption in dealing with them is that I don't fully trust what they say until it is demonstrated otherwise."

He said he would be meeting with the CEOs of the major banks next week along with the Minister for Finance Paschal Donohoe.

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The issue of additional interest being charged on mortgage holders who have availed of the payment break was raised in the Dáil earlier this week, by Sinn Féin deputy leader Pearse Doherty.

Mr Doherty said people are being charged "a Covid penalty", that all 80,000 customers who have taken the mortgage payment break will face higher repayments and higher debts because interest will accrue.  

Mr Varadkar told the Dáil that if banks seek to make profit from giving people a break on their mortgages during the Covid-19 pandemic, it would be viewed as a serious scandal.

Following the Tánaiste's interview with RTÉ's Business show, Mr Doherty issued a statement, querying Mr Varadkar's recollection of his meeting with the banks.

The Séin Fein TD said: "In response to questions from me in the Dáil on Thursday, the Tánaiste said 'Banks never claimed that they couldn't waive interest [in respect of Covid-19 mortgage breaks]… They did say it would be possible to waive interest for that period.'

"This account contradicted the minutes of a meeting with senior bankers the former Taoiseach had on 11 May.

"Today on RTÉ radio, the Tánaiste has now given a different version of events; saying that he was told by bankers that they had to charge interest on Covid-19 mortgage breaks."

Mr Doherty said if this was the case, the Tánaiste "needs to correct the Dáil record".