Bank of Ireland chief executive Richie Boucher yesterday rejected claims of "profiteering" on variable mortgage rates during a near three-hour session with members of the Oireachtas finance committee.

Dublin-based TD Richard Boyd Barrett accused him of "serious profiteering" by charging up to 4.5 per cent for its standard variable rate (SVR) when its cost of funding was 1.15 per cent for the six months to the end of June 2014, and at a time when AIB is set to cut its rate by 0.25 percentage points from December 1st.

Not ‘exceptional’

Mr Boucher said the group’s net interest margin was actually 2.08 per cent, which he said could “not be construed as exceptional”.

He said there was considerable “liquidity risk” attached to funding a mortgage that could run for 25 years or more, and that the bank was also required by regulators to maintain a large reserve of capital.

Earlier, Fianna Fáil’s Michael McGrath and Fine Gael’s Kieran O’Donnell asked Mr Boucher how then was Bank of Ireland able to charge a fixed rate in Northern Ireland of only about 2 per cent.

Mr Boucher said this was a special offer reflecting market conditions there and noted Bank of Ireland pays the 1 per cent stamp duty for first-time buyers in the Republic.

Fixed rates

He said Bank of Ireland offers cheaper fixed rates in the Republic than its SVR.

“We would always encourage our customers to look at fixed rates,” he added.

When asked by the Labour Party’s Ciarán Lynch if he would pledge to reduce its SVR in the near future, Mr Boucher said: “I can’t make an absolute commitment to you about how we will price our products.”

Several committee members praised AIB's scheme with the Irish Mortgage Holders Organisation to help those fallen into arrears and asked why Bank of Ireland has not run a similar plan.