The Minister for Finance, Mr McCreevy, has asked the State's financial institutions to defer any new applications for increases in charges and to co-operate in slowing down the pace of lending growth in the economy. Mr McCreevy, who met the Irish Bankers' Federation yesterday, also urged banks and building societies to keep profit margins as tight as possible to assist the Government in curbing inflation.
The meeting was attended by Anglo Irish Bank chief executive Mr Sean Fitzpatrick and EBS chief executive Mr Pat O'Reilly, who head up the IBF. The chairman and chief executive of the State's two biggest banks, AIB and Bank of Ireland, also attended the meeting.
In a statement afterwards, Mr Fitzpatrick said the banks will do "everything possible" to support the Government's efforts on inflation. Mr Fitzpatrick added that they shared the Minister's concerns and fully recognised the reasons for those concerns.
Addressing the meeting, Mr McCreevy stressed the need for all sectors to exercise restraint in the current climate. He asked the banks to put off any planned price increases and to hold back on implementing any price increases which have already been approved by the Director of Consumer Affairs. The IBF is the representative body for the banking industry, representing 50 institutions including banks based at Dublin's International Financial Services Centre. It is difficult to see how much influence the Government can bring to bear on the banking industry, particularly in relation to lending and profit margins, as competition from foreign banks begins to bite in the Republic.
The two main banks are also focused on delivering returns for their shareholders and could not be expected to deliberately depress their business activities or profit growth by the Government.
Meanwhile, a meeting scheduled for yesterday between Bar Council representatives and Department of Justice officials has been postponed until next week. It is one of a number of meetings between representative organisations and Government officials on the issue of fees and charges and their effect on inflation.
