30/03/2010

Banking Industry Braced For 'Briefing'

The Irish Banking Agency is bracing itself ahead of the crucial Cabinet briefing this morning by Finance Minister Brian Lenihan on the final details of overhauling the State's banks.

Mr Lenihan will also be making a speech in the Dail this afternoon which will be preceded by statements from the National Asset Management Agency and the Financial Regulator.

Share prices in Irish banks have been falling steeply in both yesterday and today in anticipation of the Finance Minister's decision as the threat of state control worries investors.

AIB is believed to be most at risk of coming under state control and yesterday faced criticism from Opposition party Fine Gael who accused the bank of a "cynical intentions".

Finance Spokesman Kieran O’Donnell said that the sudden announcement by AIB yesterday, of its intention to raise its mortgage interest rates by 0.5% from close of business today, showed the bank was "thumbing its nose to hard-pressed mortgage holders and taxpayers".

“While stone-walling on the recapitalisation negotiations, the bank has the nerve today to impose a 0.5% increase in mortgage rates. We need to know when Minister for Finance Brian Lenihan became aware of this increase and what his attitude is towards it," he said.

Mr O'Donnell added: “On top of this, these mortgage holders are the very people who will be carrying the burden of recapitalisation and NAMA for generations to come.

"There is also a double jeopardy here for consumers and mortgage holders, who are now being caught in a bind where their interest rates are being raised while it is more difficult for them to switch lenders.”

Minister Lenihan has already introduced the bank guarantee, nationalised Anglo and pumped €11 billion into the three largest lenders. Now he says he hopes to sort out the banks once and for all.

Today the regulator will say how much money banks will need to cushion against bad loans.

(DW/BMcC)

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