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VOICES

Column Why banks have begun picking our pockets (and more is still to come)

We need more straight talking on the status of Irish banking, writes expert Ronan Coburn.

JUST BECAUSE THE truth hurts, is no reason to give truth a wide berth. Last week, Justice Peter Kelly, one of the country’s most senior judges, claimed that appointments to the Supreme Court are ‘purely political’. I would like to follow this with some other self-evident home-truths like – the Emperor never had any new clothes, he is naked.

No rescue

On a macro level, Germany and its two closest allies in the Eurozone (Finland and Holland) last week dashed hopes that Spain and Ireland could transfer billions in debt incurred through bailing out their banks into the European Stability Mechanism (ESM) rescue fund. After meeting in Helsinki, the German, Dutch and Finnish finance ministers said in a statement that ‘legacy assets’ would not be covered, in an apparent reference to Ireland’s €64 billion public bank debt bailout.

In other words, such ‘rescue-funds’ are not to be available to historical (self-inflicted) bank difficulties. Who could blame these well-run triple-A nations. We shouldn’t continue any longer to keep our heads down (in docility) and ‘keep with the program’ –  merely achieving highly patronising compliments from our Northern EU and Troika brethren, at the expense of our Spanish, Portuguese, Italian and Greek cousins.

Sadly but inevitably, the stage is being approached when even right-thinking citizens in Ireland should collectively – as inhabitants of what has been allowed to become a diseased country – consider engaging in their own austere counter-responses.

Picking pockets

On a micro-level, our bailed-out banks are still not lending to businesses. They are still not even helping themselves to stage a true recovery. Instead they are endeavouring to rebuild their depleted balance sheets by picking our pockets: by levying higher levels of interest, account fees and other charges on individuals and businesses.

These continuing financial extractions are being made in the form of loaded borrowing rates, penal credit card interest and overseas transaction levies. Mortgage arrangement fees have already been re-introduced and ATM card and usage levies are expected to follow closely.

Having amputated the profit-generating capabilities of many good businesses, Irish banks are now coming after their life-blood as well. Anglo Irish Bank, AIB Bank and Irish Nationwide require to be retrospectively culled, instead of having been propped-up and bailed out on the impoverished taxpayers’ overdraft in September 2008.

Banking cartel

Unfortunately, there will be little opportunity to avoid the new regime of rising banking-related charges. The days of the banking cartel will be back with a vengeance, and changing banks will not be an option for the majority of personal and  business customers. New charges for opening accounts are very likely, and such charges will be inter alia targeted at passing on the costs of more rigid regulation and anti-money laundering requirements implementation. An Post have already begun taking over everyday high street banking functions from bank branches that are being closed down.

The days of high interest current accounts and high interest rates on savings accounts are certainly dead and gone. There is little point in being a good customer of a bad bank (ie a bank that is behaving badly)

Ronan Coburn is a Dublin-based independent banking consultant, forensic accountant and expert witness. He is also a member of the Institute of Bankers in Ireland. Further information at thebottomline.ie.

Read: Column: Don’t like bank charges? Sorry, but they’re here to stay>

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