Opinion: Central Bank says we have €141bn in retail deposits in Ireland and the banks are paying customers virtually zero interest on that fortune

While the whole country was glued to Oireachtas TV, watching Ryan Tubridy and Noel Kelly get skewered by politicians, I was meeting someone who had just inherited a significant sum of money. The point of discussion was the fact it had been in the bank for over six months and they felt they “simply had to do something with it as it’s earning nothing in the bank and inflation is very high”.

It brought to my attention the fact that here we have a country, engrossed with how a semi state spent €345,000 yet meanwhile is seemingly happy to ignore the fact they we, as savers, are missing out to the tune of over €3 billion, per year, in deposit interest from banks, credit unions and the post office. It represents an extraordinary transfer of wealth from the ordinary savers of this country to the banks and their shareholders, from pensioners and those saving for a deposit for a house, to the banks and their shareholders

It may surprise you to know that, as per recent Central Bank data, we have €141 billion in retail deposits in Ireland. This is not pensions or company cash, it’s the accumulated savings of the 1.86 million households in this country ranging from accounts with €100 in them, to those in the millions of euro. It will not surprise you to learn that, from the same data, the average rate of interest paid on these accounts ranges from 0.04 per cent to 0.28 per cent for on demand, to seven-day-notice accounts.

Why does this matter? Since last summer the European Central Bank (ECB) has been increasing its core rates of interest to the extent that those on tracker mortgages are paying on average over €400 per month more for their mortgage now than they were this time last year. Those increases by the ECB continued last week with another quarter point hike. The banks justify this as they are just passing on the ECB rate increase to borrowers. Those applying for new mortgages are getting notices informing them that the rate they thought they were going to get has now gone and they will be paying 0.25 of a percentage point or half percentage point more, as the bank are just passing on the ECB rate to borrowers.