Ireland threatens to penalise banks unless mortgage rates cut

DUBLIN, May 22 (Reuters) - Methods to penalise Irish banks, for charging standard variable mortgage rates that the government says are too high, will be considered if progress is not made over the coming weeks, Finance Minister Michael Noonan said on Friday.

After summoning the banks to his office this week, Noonan said lenders had agreed to offer customers simple options to reduce mortgage payments by July, including home owners who are in negative equity. Follow-up meetings will be held in September.

"The issue of a penal banking levy in the budget or powers for the central bank to regulate interest rates will be considered at that time if sufficient progress is not made," Noonan said in a statement. (Reporting by Padraic Halpin; Editing by Kevin Liffey)