Banks display little sign of learning lessons from past

Under pressure ... Finance Minister Paschal Donohoe with Cllr Padraig Conneely on his visit to Galway last Friday to update local business interests on Budget 2018.
Under pressure ... Finance Minister Paschal Donohoe with Cllr Padraig Conneely on his visit to Galway last Friday to update local business interests on Budget 2018.

World of Politics with Harry McGee – harrymcgee@gmail.com

Afew years ago the Green Party had a good idea about changing the culture of banks. It wasn’t about reform and modernization; indeed, it was about undoing reform and modernisation. There was a time when all the key decisions such as big loans and mortgages were taken locally, by the bank manager in the local branch. Often that person had been there for many years, was well-known and respected in the community, and brought common sense to bear.

But in the past generation, big loan decisions have been removed from those individuals, to be taken centrally in Dublin. There’s also a massive churn of staff in all banks; so much so that managers tend to stay in an area only a little longer than a bee on a flower. That recognition of old is no longer there.

Indeed, branches themselves are becoming strange places. The only encounter you are likely to have these days is with a machine. Some branches no longer handle money, or, if they do, it’s only for a few hours every day.

The irony of personal banking is that for most people, it is now becoming completely depersonalised – so the Greens’ proposal was an alluring one even though it will never happen.

The scale of the banking crisis in Ireland told us a lot of things. But one of the salient discoveries was just how big banks had become – too big to fail, as the saying goes.

Now recapitalised, the back-to-profit banks like Bank of Ireland are posting multi-billion euro profits.

No matter how well they present themselves you must never forget that at their core, they are money-making machines and profits rule the roost.

Which brings us to their strange, stubborn, behaviour on tracking mortgages.

You would have thought banks had got the message the world had changed by now – but obviously not.

Minister for Finance Paschal Donohoe called in the heads of all the banks to dress them down on the tracker mortgage scandal.

In all, 20,000 cases have already been identified of customers being overcharged despite having a rate tracking the interest rate set by the European Central Bank. A little over 7,000 have been compensated with 13,000 cases outstanding. And as became clear yesterday, a further 7,000 customers may have been overcharged.

For more, read this week’s Connacht Tribune.