Dáil Éireann Debate, Thursday - 15 March 2012
17 Deputy Michael McGrath asked the Minister for Finance if he expects an improvement in the funding position of covered banks arising from the warehousing of tracker mortgages, resulting in a reduction in the standard variable rate chargeable by such institutions for residential mortgages. [14829/12]
View answerAs the Deputy is aware the Government is committed to reviewing the approach to the Promissory notes with a view to reducing the overall cost to the State. The troika have agreed to engage in a process with Irish Officials to produce a common paper which will consider all options for restructuring the notes in terms of the source of funding, the duration of the notes, the interest rate etc.
As part of the discussions with the troika there has been some consideration of looking at not just enhancing the State's debt sustainability but also looking at enhancements to the banking system which could, further down the line, increase the value of the State's shareholding in those banks. At this point in time there are a number of issues under consideration but it is far too early in proceedings to talk about specific outcomes.
Tracker mortgages tend to earn low margins for the banks so removal of them from their balance sheets if this were to occur, would likely improve the profitability of those institutions, putting them on a more sustainable footing.
