Permanent tsb says may not pass on next ECB cuts

DUBLIN, Dec 5 (Reuters) - Several Irish banks said they would pass on Thursday's record interest rate cut by the European Central Bank, but permanent tsb warned high interbank rates could prevent it from passing on future cuts.

Permanent tsb, the banking unit of Irish Life & Permanent (IPM.I), said it would pass on the ECB's 0.75 percent rate cut to tracker and variable rate mortgage customers, but it may not be able to do so in the future if euro zone rates fall further.

"We need to see the ECB base rate being more closely aligned to the rate for borrowing in the wholesale markets," permanent tsb said in a statement.

"If the gap between the ECB base rate and the funding market narrows, we hope to be able to pass on reductions but if the spread remains wide, we may not be able to pass on future reductions in full," it added.

Allied Irish Banks (ALBK.I), Ireland's largest bank by market value, also said on Thursday it would pass on the ECB cut in full, as did the Irish units of British bank HBOS Plc HBOS.L.

(Reporting by Andras Gergely; Editing by David Cowell)