aib - an overview
from these accounts.
But while the banks claim they are as competitive as their European counterparts on charges and commissions, there is no doubt their comfortable position in Irish corporate life has been bolstered by the fact they pay such little tax.
Between January, 2000 and the beginning of this year, corporation tax has come down from 24 per cent to 12.5 per cent.
This compares very favourably with the UK, where banks pay tax at 30 per cent. And with astute tax planning, the Irish institutions have, in the past, been able to push tax paid below 10 per cent - more than four times lower than that being paid by many bank customers on their incomes.
The Consumers’ Association of Ireland (CAI) said that it was opposed to the proposed merger of IT functions as between AIB and Bank of Ireland through a joint venture company.
Speaking on the issue, CAI’s Chairman, Mr. Michael Kilcoyne said, "Technology is one of the principle weapons of competition. The Irish banking sector is already riven with tepid competitive forces. The proposed merger could conceivably become a softening up step in a merger between Bank of Ireland and AIB, currently being promulgated with the Department of Finance and with its Minister.
If AIB and Bank of Ireland were to merge canteen facilities they would save money, so it comes as no surprise that there would be a saving in an IT Merger. But who would benefit? The main Irish banks combine to make over 2.5bn in profit each year, most of which comes from Irish consumers. Based on the recent Government report - Strategic Review of Irish Banking, the banks already enjoy a return on assets some three times more than large continental players such as KBC, ABN and Rabo, -the very type of organisations that Irish banks fear from takeover”
Irish banks already have the lowest cost expense ratio outside of Luxembourg, and charge 7% more than the EU average for credit cards. We have the second most expensive overdrafts in Europe outside of Portugal, and the second most expensive personal loans outside of Holland. Super premium profit on Irish homeloan mortgages were exposed when Bank of Scotland entered the market, forcing profit margins on homeloan mortgages to fall a whopping 80% in Autumn ‘99. In terms of infrastructure, our bank branch density is one-third the EU average, and the number of ATM’s is 40% less than for other EU consumers. This is a disgraceful heritage.
Now the main banks propose to merge their IT functions, removing competitive pressure between them on the most vital cog - providing service. This is entirely unsatisfactory" said Mr. Kilcoyne.
Allied Irish Banks have long established ebusiness channels including its internet banking service with over 55,000 customers online by year 2000. Customers are already availing of the AIB mortgage website where home loans can be organised from the comfort of the home. Share dealing on the internet is already a reality for Allfirst customers. Bank customers can even check accounts by using [next page]