Banking Sector Issues

Dáil Éireann Debate, Tuesday - 12 November 2013

Tuesday, 12 November 2013

Questions (96)

Lucinda Creighton

Question:

96. Deputy Lucinda Creighton asked the Minister for Finance if he will confirm if Bank of Ireland, Allied Irish Banks or Permanent TSB have within their systems the knowledge of a single euro figure that represents the cumulative difference between the total value of their entire owner occupier mortgage debt outstanding versus the cumulative total current market value of all the owner occupier mortgage collateral on its balance sheet; if he will confirm if Bank of Ireland, Allied Irish Banks or Permanent TSB are able within their system to detail the total difference in euro between current market value of the underlying collateral of those owner occupier mortgages in arrears and the total owner occupier mortgage arrears debt outstanding; if he will confirm if the Central Bank of Ireland has this cumulative data for each of the domestic banks; if he will provide the cumulative figure; and if he will make a statement on the matter. [48069/13]

Written answers

Minister for Finance

The covered institutions have provided me with the following details regarding their mortgage books. As the Deputy will be aware the Central Bank of Ireland is currently undertaking an asset quality review and the question of loan to value and underlying collateral value is being looked at as part of this exercise.

Bank of Ireland

Bank of Ireland’s annual report for the year to 31 December 2012 gives comprehensive disclosures on its residential Irish mortgage portfolios (particularly pages 321-333), its accounting policies (particularly pages 148-169), its credit risk management and asset quality (particularly pages 55-77) and capital position (particularly pages 26-28 and 96-97). Bank of Ireland also provides detailed disclosure on its Irish mortgage book on pages 114 through to 125 of the Group’s interim financial statements for the six month period ended 30 June 2013. In particular, the disclosure on page 118 and 119 relating to “Loan to value (LTV) ratio of total Retail Ireland mortgage loan book”.

AIB

I have been informed by AIB that all disclosures in relation to AIB’s loan to value ratios and collateral values of residential mortgages can be found on pages 71 and 97 to 99 of AIB’s 2012 Annual Financial Report. This report, published on 27th March 2013, is available on the AIB website at www.aibgroup.com/investorrelations.

PTSB

I have been informed that the disclosures in relation to PTSB’s loan to value can be found on page 161 of the 2012 annual report. It should also be noted that as the positive equity on one loan is of no benefit to the Bank as against the negative equity on another loan. The Bank can’t get or offset the benefit of one customer’s positive equity as against another customer’s negative equity.

The Central Bank of Ireland has also informed me that the Loan-To-Value (LTV) measures the value of the loan outstanding as a percentage of the value of the property collateral. This is an important consideration in the underwriting of mortgages and in the on-going monitoring of credit risk. Each of the banks referenced calculates on a periodic basis the LTV of the mortgages in their portfolio (generally based on indexing valuations to current values using the CSO HPI).

In making provision for loans in arrears the banks use the indexed value of property collateral in addition to including other costs of recovery of the outstanding loan.