DUBLIN (Reuters) - Ulster Bank's standard variable rate mortgages are not overpriced, the chief executive of RBS' (L:RBS) Irish unit said on Wednesday, signalling that the bank will resist pressure from the Irish government to cut rates.
Ireland's finance minister Michael Noonan said on Tuesday that he will ask the country's banks to cut the cost of variable rate mortgages and expects them to follow such a recommendation, increasing tension between the government and the banks.
Ulster Bank chief executive Jim Brown told a parliamentary committee that the cost of providing mortgage finance in Ireland was substantially higher compared with other markets in which Ulster Bank and RBS operate.
"In this context, we do not believe that our SVR is overpriced," Brown said, listing the cost of the bank's capital, funding, operations, compliance, management of mortgage arrears, credit losses and levies.
"Unless these come down, our standard variable rate mortgage won't come down."
The government, which is the majority shareholder of Allied Irish Banks (I:ALBK), permanent TSB (I:IPM) and controls 14 percent of Bank of Ireland (I:BKIR), is due to have talks on variable rate mortgages with local banks, including Ulster and the Irish unit of KBC (BR:KBC).