Recapitalising the banks and interest rates

G

Gerry Canning

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Sarenco.

Did we not put in Billions to recapitalise Banks.?

Would that not mean ongoing good mortgages are not penalized?

It seems to this layman , that we covered Banks on Capital front , so it seems wrong to re-penalize?

I find that on charging issues appear the Banks who we bailed out have double charged us for our generosity?
 
I'm not sure what answer you're expecting here Gerry. Yes banks were re-capitalized to the extent of billions. BoI have largely re-paid the amount input and should fully repay the residual amount in the short term. AIB are owned by the State and have the same requirement to retain profitability as any independent organization. This means that they price their products to achieve a maximum return for the shareholders (predominately us the taxpayers). Sarenco's previous commentary related to the ongoing risk capital requirements of all banks (including Irish ones). This is by no means the only reason for the current high margins. The predominant reason is the absence of competition in the marketplace.
As previously mentioned banks like other businesses tend to maximize their profits by charging what the market will bear. They are not a social service nor do they have any "conscience" in respect of previous misdeeds etc. There is no social obligation on the banks to reduce prices or to be lenient on certain classes of client in order to benefit Society. Likewise the Government did not bail out the banks because they felt sorry for them. This was done as an economic necessity and should in no way be related to what are standard business practices.
Fairness is not something that Corporates understand or practice unless there is a perceived business benefit in doing so. Corporates do not have a conscience.
 
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