Home » Politics » Irish bankers remain target for politicians ahead of polls

Irish bankers remain target for politicians ahead of polls

London / Bloomberg

Irish banks are acting immorally, and ripping off their customers. At least, that’s what politicians are saying before the nation’s Feb. 26 general election.
Bankers remain a prime target for politicians, seeking to win over voters still angered by what the IMF described as the world’s costliest banking crisis since the Great Depression. Fianna Fail, once the dominant party of Irish government, was swept out of power in 2011 amid a wave of anger over the financial collapse and the cost of saving the banks.
“No political party wants to be seen as being soft on the banks given the underlying public resentment toward the bailouts that the banks received,” said David Holohan, chief investment officer at Merrion Capital in Dublin. “It’s largely electioneering.”
Opposition party Sinn Fein says banks have acted “appallingly” by not passing on European Central Bank rate cuts to customers. Fianna Fail, which began the €64 billion bank bailout, wants to give the central bank more power to rein in the cost of loans. The average rate on new Irish variable-rate mortgages was 3.3 percent at the end of December compared to 1.99 percent for the euro region, central bank figures show.
At its manifesto launch last week, the Labour Party, the junior coalition party, said it wants to treble a bank levy from €150 million a year. Irish banks’ ability to reduce tax payments by offsetting profits against earlier losses is “immoral,” Brendan Howlin, public expenditure minister, said in an interview with state broadcaster RTE.
Trebling the levy would reduce profits at Bank of Ireland Plc and Allied Irish Banks Plc by about €140 millioneach, according to Goodbody Stockbrokers analyst Eamonn Hughes. Hughes forecasts net profit of between €900 million and €1 billion for the two banks from 2017.The state almost wholly owns Allied Irish Banks, 14 percent of Bank of Ireland and 75 percent of Permanent TSB Group Holdings Plc. “The proposed measure has obvious populist appeal into the election,” said Hughes. “However, we would query how the Labour Party thinks about the impact it would have on its stakes in both AIB and PTSB.”
Investors can relax, though. Much of the rhetoric will probably come to naught after the election, Holohan said, even though it may produce an inconclusive result. The ruling Fine Gael-Labour coalition may win 60 seats, short of the 79 needed for a majority, Cantor Fitzgerald LP said on Monday, citing polls. Still, Fine Gael is likely to be the biggest party after the election, and it doesn’t want to raise the bank levy or hand the central bank extra powers. Finance Minister Michael Noonan has said his aim is to maximize the return for the taxpayer from selling off the banks, and he wants to sell 25 percent of AIB later this year and a further 25 percent by 2016.

Leave a Reply

Your email address will not be published. Required fields are marked *

Send this to a friend