Irish Banking Culture Board out of step with banks with call to extend levy

Banking charge raises about €87 million a year

The Irish Banking Culture Board (IBCB) has said there is “merit” in extending the lifespan of the banking levy, taking a stance at odds with members who have highlighted challenges posed by the charge.

It is one of the starkest examples yet of the 13-member board – which was set up in 2019 in the wake of the tracker mortgage scandal and where banks are outnumbered by consumer, industry and employee advocates – taking a view on a key issue affecting the sector that is out of step with the banks.

The levy is currently raising about €87 million a year, down from €150 million annually between 2014 and 2021, before Ulster Bank and KBC Bank Ireland became exempt from the charge when they signalled they were exiting the market.

Minister for Finance, Michael McGrath, launched a public consultation in April on the future of the levy. It has been extended a number of times since it was introduced in 2014, initially for three years, and is currently due to come end in December 2023.


“We consider there is merit in further extending the levy, on the proviso that it is applied to a wider cohort of institutions to reflect the changed market composition of banking in Ireland and in accordance with the objective of achieving a level playing field within the sector,” the IBCB said in a submission to the Department of Finance, in a clear reference to nonbank finance firms that have entered the market in recent times.

“Any widening of those subject to the levy should clearly be the subject of an appropriate impact analysis,” said the submission, seen by The Irish Times.

The culture board said that funding generated by any levy on the wider banking sector could be directed towards “both improving levels of financial literacy in Ireland and protecting financial access, thereby delivering a real societal contribution to current and future generations of the Irish public”.

Sources said that Banking and Payments Federation Ireland’s (BPFI) submission set out challenges posed by the levy on the sector. It stopped short of urging that it be scrapped, however, reflecting a fact that there are varying views on the matter even among the three remaining banks, they said.

A spokeswoman for the BPFI declined to comment on the lobby group’s stance, submitted before the deadline of May 5th, set by the Minister.

Twelve other EU countries – from Austria to Sweden, as well as the UK – have some form of bank levy, according to the Department of Finance data. Almost all of these brought in levies in the wake of the international financial crisis.

While the Irish charge is based on deposit interest retention tax (Dirt) paid by the banks, the IBCB does not offer a suggested methodology for the collection of a levy in the event it is expanded beyond the three banks.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times