The recapitalisation of the Irish banks by the Government must benefit mortgage holders and small business owners in Mayo and all over the country, according to Fianna Fáil TD and member of the Oireachtas Enterprise Committee, Dara Calleary.
As part of the deal that will see the Government provide substantial funding to AIB, Bank of Ireland, and Anglo Irish Bank, the three banks have agreed a new credit package that should assist people in Mayo.
Under the new arrangement the Government is to provide €2 billion investment to both AIB and Bank of Ireland at eight per cent return per annum. They will also have a 25 per cent voting right at board level. In the case of Anglo Irish Bank there will be a €1.5 billion investment at 10 per cent return per annum and the Government will have 75 per cent control of the bank. The State will receive significant annual returns on these investments every year with approximately €500 million being returned to the Government each year.
Among the terms agreed as part of the deal were several items that will have an effect on every community in the country including a commitment to provide an additional 30 per cent capacity for lending to first time buyers, that the banks will take action to assist householders who are in arrears with their mortgage payments, and that an additional 10 per cent capacity will be made available for lending to small and medium enterprises.
“The important thing about this deal is that it should have a very practical effect on the ground throughout Mayo and in other parts of the country too,” said Deputy Calleary.
“The banks must now make more money available to first time buyers to help them purchase a new home. They will have to make sure that there is some flexibility in place if someone runs into difficulty with making their mortgage repayments. The banks have agreed to wait at least a period of six months after arrears first occur before pursuing repossession of anyone’s homes.”
There is also good news for small business owners and farmers. The recapitalised banks will provide additional money and this should mean easier access to short-term loans or overdraft facilities where needed.
“It is vital that this money is made available equally around the country and benefits rural businesses as much as those in the main cities,” added Dep Calleary.
“The Government had to make this money available to the banks to keep them viable. It is an awful lot of money but it was necessary to protect the banks and the economy. What’s important though is for the people of Mayo to realise that the move was taken with the best interests of the economy in mind,” Dep Calleary concluded.
