@ MICHAEL McGRATH T.D. ‘CORK SOUTH CENTRAL Mr Mario Draghi President, European Central Bank Kaiserstrasse 29 60311 Frankfurt am Main Germany 19 September 2014 Dear President Draghi, T have become increasingly concerned at the interest rates being charged by banks operating in Ireland on loans to houscholds and small and medium sized enterprises (SMEs). In essence, the interest rates being charged are significantly above euro zone averages and further, a clear patter has emerged of ECB rate reductions not being passed on to variable rate mortgage holders, other personal borrowers and SMEs. On a number of occasions in the past few years when announcing a reduction in the ECB’s main refinancing rate, you have expressed the hope that banks across Europe would pass on the reduction to their customers. With the exception of tracker loan products, which by definition move in line with the ECB rate, the banks in Ireland have not in recent times passed on the ECB rate reductions. At this point, the interest rates being charged by banks in Ireland bears no relation to their cost of funds they source from deposits, the wholesale markets or the ECB, ‘The average interest rate being charged in the euro area for new residential mortgages is 2.64%, The Central Bank of Ireland’s claim that the rate for new mortgage lending in Ireland is 3.15% is deeply misleading as it includes the restructuring of existing tracker mortgages. In truth, a new mortgage holder in Ireland can expect to be paying circa. 4.5% depending on Joan to value. Existing standard variable rate mortgage holders are also currently paying well in excess of 4%. The situation facing SME customers is similar. Irish SME’s are being charged considerably higher interest rates on loans compared to their euro area counterparts. Ata time when the banks have access to cheap finance, it is not acceptable that variable rate mortgage holders, other personal borrowers and SMEs continue to be charged penal interest rates compared to other euro zone member states. The policy direction given by the ECB to reduce rates in line with the ECB’s main refinancing rate is being ignored. I would like to know if this is acceptable to you as President of the ECB. In addition, given that the ECB is take over the supervision of a number of the main banks operating in Ireland in November under the Single Supervisory Mechanism, I am hoping the issue of excessive interest rate charging is one that you will tackle. Constituency Office, Main Street, Carrigaline, Co. Cork, Tel 021-4376699 Fax 021-4834252 Email michael megrath@oirie oo ia ea ony linden a al laa ca tage tig rere mementoI would be most grateful if you comment on whether anything can be done to tackle the exorbitant interest rates being charged by banks in Ireland today and, in particular, their failure to pass on ECB rate reductions to their customers, [look forward to hearing from you. Yours sincerely, led Meco Michael MeGrath TD Fianna Fail Spokesperson on Finance