The high level of concentration in Irish Banking is costing small firms in Ireland millions of euros every year, according to a new report by ISME, the small firms lobby group.
According to the report, which was commissioned by Compecon Ltd, two banks alone account for 77 per cent of the SME market which is loosing competitiveness because of the lack of choice in banking.
The report also shows that Irish banks have the one of the highest return on equities in the 836415, at 35 per cent the European average.
Furthermore, Irish SMEs are charged the highest interest rates in Europe, with Irish rates at 8.9 per cent in comparison to rates of between four and six per cent for other countries.
In total, the report estimates that Irish SMEs are paying 78 per cent more for finance than their European competitors.
The report also identifies barriers to entry in the SME banking market as a major cause of the lack of competition. Only 8 per cent of SMEs had changed their bank in the previous three years and 60 per cent of those experienced significant difficulties in doing so.
ISME has accused the Irish Financial Services Regulatory Authority, of failing to adequately address the activities of the banks and is calling on the Irish Competitions Authority to initiate a thorough investigation into the banking sector.