The Competition Authority will closely examine personal current accounts and loans to small businesses in the next phase of its study into the level of competition in the Irish banking sector.
Speaking at the publication of its latest consultation paper into the banking sector, Mr Terry Calvani of the authority said the decision was taken to narrow the scope of the study because of the importance of current accounts and small business loans to consumers, businesses and the economy in general.
Personal accounts also act as a "gateway" product to other banking services such as the provision of loans and other forms of credit. Loans to SMEs were chosen because as they are an important source of employment and growth within the economy; SMEs have few non-bank alternatives, especially with respect to working capital loans.
The authority will analyse the extent of competition in the market for current accounts and small business loans as well as undertaking an overall analysis of the Irish banking industry.
The competition commenced a four phase-examination of the Irish banking industry in banking last September and today's consultation paper marks the end of the second phase of the study.
The banking sector, which is dominated by a few major players, accounts for 4 per cent of Ireland's GNP and exerts a major influence on other sectors of the economy.
Incumbents have a long established presence in the market, which may make entry into the sector more difficult. The highly concentrated nature of the Irish banking market has long been a cause for concern among consumers and businesses.
Yesterday, the Irish Small and Medium-sized Enterprise Association (ISME) released details of a study showing what it called a "serious lack of competition in the banking market".
ISME claimed that Irish banks overcharging their customers compared to other European countries in terms of interest margins and fees though this has been disputed by the banks.
The authority is inviting submissions from interested parties which must be submitted by September 30th, 2003.