LAST UPDATE | 11 Jul 2020

TÁNAISTE LEO VARADKAR has said that he doesn’t fully trust the banks when they say they won’t aim to profit from interest rates owed on paused mortgages during the Covid-19 crisis.

When asked about the ongoing issue of whether interest rates on mortgages would be waived for the three-month period where a mortgage moratorium was in place due to the pandemic, Varadkar said that the banks had argued two things during a meeting with the government in May that meant interest rates would have to be paid.

“The banks said they couldn’t waive interests during that period,” Varadkar said, adding that they argued there was regulatory barrier to it, which has since “been clarified that has not been the case”.

Varadkar checked this with the Central Bank as recently as yesterday, he said.

The second argument they made, he said, was that if they extend the term of the loan, there would be additional administrative costs on the bank of managing that finance.

“If you accept that there are costs, the costs have to be borne by somebody,” Varadkar said, adding that he accepts this point. “Is it borne by the banks, is it borne by the person who is benefiting from the cost break, is it borne by everyone else? Is it borne by the taxpayer? I don’t think so.”

In April, Sinn Féin finance spokesperson Pearse Doherty told the Dáil that he had heard from one Permanent TSB customer who had applied for a three-month reprieve and faced being saddled with an extra €7,739 in interest charges.

Varadkar said that he sought assurances from the banks that “they wouldn’t get any additional profit or additional margin from the fact that they have extended mortgage loans and business loans.” 

Varadkar was then asked did he believe the banks and other lenders try to make additional profit out of this:

“They have form, that’s the truth of this,” he replied, referencing the ongoing tracker mortgage scandal and previous scandals.

Banks, when you tend to meet them, like to talk you down with regulatory gobbledygook. 

I don’t fully trust what they say unless it’s demonstrated.

Speaking on RTÉ’s Saturday with Cormac Ó hEadhra programme, Sinn Féin finance spokesperson Pearse Doherty criticised Varadkar for initially telling the Dáil that the banks hadn’t said they couldn’t waive interest rates, when Doherty made that assertion.

Varadkar has now corrected that statement on air today – Doherty is asking that he correct it for the Dáil record where he said that banks stated they .

Listening to what Leo Varadkar said today is absolutely shocking. I know he was asleep at the wheel… For a Taoiseach to sit at a meeting, and the Minister for Finance, and the Minister for Enterprise, and to be told by the CEO something that is simply not true as we know today, and say that when we’re in these meetings the bankers talk about regulatory gobbledygook.

Doherty said that he knew that it wasn’t true that interest rates couldn’t be waived because he asked the Financial Regulator.

“I wouldn’t trust the bankers and the idea that you have the most senior ministers actually swallowing this hook, line and sinker…” he said, adding that the reason they are pursuing the issue is because Doherty has repeatedly raised it.

July stimulus

Varadkar said that the July stimulus would be worth a similar value to the UK’s stimulus package, if you adjust for the population.

Speaking on RTÉ’s The Business, Varadkar said that what they wanted to achieve with the July stimulus was “a package of scale that can be deployed at speed”. A further stimulus package will be announced in October, he said.

Varadkar said that the package would be worth a similar amount to the UK when adjusted to Ireland’s population: if you divide the UK’s £30 billion stimulus package by 60 (the number of millions of citizens in the UK) and multiply by five (the millions of citizens in Ireland), you get £2.5 billion, which is around €2.8 billion.

Varadkar stressed however, that it wouldn’t contain the same policies.

He said the UK is going to end their wage subsidy scheme in October, while although Ireland’s is supposed to end on 10 August, “it’s not going to end in August”, Varadkar said.

When asked whether €2-3 billion was enough of a stimulus, Varadkar said that “We’re not going to fire all our bullets at the same time… There will be more bullets in October, and I think that’s the right approach.” 

“This year we’re going to borrow €25-30 billion, we are a country that has a very high debt, we don’t want to have a really high deficit, we’re not trying to be the best fiscal boys in the class, we’re looking to be middle of the class.

Grants to businesses

Varadkar said that where the government has “probably fallen down” in support for society, “is on grants to businesses”.

We set aside €250m in the Restart Grant, and 37,000 have applied, he said. 

When asked whether he feels sorry for how Taoiseach Micheál Martin’s tenure in office has begun, Varadkar said “I don’t feel sorry for him, he achieved what he sought to achieve,” adding that he’s looking forward to working with him.