Written Answers Nos. 63 - 71
63. Deputy Michael McGrath asked the Minister for Finance further to Parliamentary Questions Nos. 50 and 51 of 22 January 2014, if he will forward, as promised, the information requested without further delay. [8808/14]
View answerThe replies to the questions cited have issued by letter from my office to the Deputy. In addition to information concerning the Department, the questions sought information in relation to the Department's agencies and the Central Bank, which was not directly accessible by the Department. This meant that the replies were not available immediately.
64. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which home mortgages will continue to be governed by the Central Bank of Ireland and his Department's regulations in the event of the sale of loan books by lenders to unregulated third parties; and if he will make a statement on the matter. [8809/14]
View answerI understand that a number of the unregulated purchasers of mortgage loan books are abiding by the Central Bank's Code of Conduct on Mortgage Arrears on a voluntary basis. The application of the protections provided to mortgage holders under the Central Bank's Code to loan books which have been sold by regulated financial institutions to unregulated financial institutions is legally complex as it could affect contracts already entered into. It needs careful consideration. For that reason, my officials are currently examining the issue with their colleagues in the Central Bank and in the Attorney General's office.
65. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he is satisfied that all lenders remain compliant with his Department's and the Central Bank of Ireland's guidelines in determination of solutions in cases of mortgage arrears with particular reference to family homes; the extent to which economic circumstances including unemployment continue to be borne in mind where efforts are being made to achieve a sustainable solution in view of the fact that in many such cases the loans offered were unsustainable at the outset; and if he will make a statement on the matter. [8810/14]
View answerThe Central Bank's Code of Conduct on Mortgage Arrears (CCMA) places an onus on the banks in respect of a co-operating borrower, to explore all the options for offering an alternative repayment arrangement to address a mortgage difficulty and provides a strong consumer protection framework to ensure that those borrowers in difficulty with their mortgage repayments are treated in a fair and transparent manner by their lender. The CCMA is a statutory Code issued under Section 117 of the Central Bank Act 1989 and lenders are required to comply with the CCMA as a matter of law.
As statutory regulatory of credit institutions, the Central Bank has the power, from both a prudential and consumer protection perspective, to require banks to meaningfully address mortgage arrears cases on their books. Durable long term restructures will have to be applied having regard to the circumstances of individual cases.
The Deputy will be aware that the Central Bank's Mortgage Arrears Resolution Targets (MART) announced last March set time bound and measurable targets for the six main banks requiring them to systematically address their arrears book. On the basis of their audit of the bank's mortgage arrears targets, the Central Bank has indicated that all six mortgage lenders covered by the MART process have reported that they met the 20% proposed sustainable solutions target for the second quarter of 2013 and also the 30% target for the third quarter in 2013. Under this rolling process, quarterly performance targets have now been set to the end of June 2014 to require the banks to propose and put in place durable long term solutions to address individual cases of mortgage arrears of more than 90 days in arrears. The subsequent targets set by the Central Bank will be the subject of further audit work to ensure consistency with the sustainability principle in respect of solutions being offered by the lenders.
Furthermore, the Deputy may also wish to note, that according to information collected by my Department for the 6 main lenders, in the case of private dwelling homes some 51,000 mortgage accounts in difficulty have been the subject of permanent restructuring following engagement between borrower and lender. A further 21,000 mortgage accounts in difficulty have been the subject of temporary restructures. The data published by my Department and the Central Bank would appear to demonstrate some success by the lenders in addressing the accounts in early arrears and putting in place appropriate measures to prevent borrowers from going into arrears.
Taken together, the necessary framework is in place to enable banks to work with distressed homeowners to reach sustainable solutions for dealing with their personal indebted situations. However, early and effective engagement between borrowers and lenders is key to resolving the cases of mortgage difficulty. Where there is effective and meaningful engagement by all parties regarding a mortgage difficulty, the data shows that an increasing number of durable long term mortgage restructures is being put in place. However, it is accepted that it will be necessary for lenders and borrowers to continue to build on this throughout 2014.
66. Deputy Bernard J. Durkan asked the Minister for Finance the degree to which any increase in economic growth over the next two years might become a factor; the extent to which ongoing budgetary cuts need to be achieved to bring borrowing into line with the 3% of GDP target; and if he will make a statement on the matter. [8811/14]
View answerWhile the Government remains committed to achieving the target deficit of less than 3% of GDP by 2015, Government policy on any such measures deemed necessary will be finalised closer to Budget 2015, when the most up to date economic and fiscal information is available. Any measures announced will continue to be implemented in as fair and equitable way as possible while fostering economic growth.
The macroeconomic narrative accompanying the Budget and SPU routinely includes quantitative sensitivity analysis of the impact on economic growth above or below the baseline on fiscal variables such as deficit and debt. The most recent iteration is included in Budget 14 (Table 12, page C.25). The Department takes these likely impacts into consideration when framing fiscal policy at Budget time.
67. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which fundamental economic indicators are coming into line with good practice; and if he will make a statement on the matter. [8812/14]
View answer69. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which economic indicators here compare with other eurozone countries; and if he will make a statement on the matter. [8814/14]
View answerI propose to take Questions Nos. 67 and 69 together.
Signs of economic recovery are increasingly evident. In the third quarter of last year, GDP increased by 1.5 per cent; while fourth quarter figures are not yet available, high frequency data are reasonably encouraging. The resumption of economic growth reflects the improvement in our competitiveness that we have seen in recent years and is indicative of a very flexible economy. But we are also seeing a moderate recovery in domestic demand, suggesting that some of the imbalances built up during the bubble years are being corrected.
My Department estimates that GDP rose by 0.2 per cent last year; this compares with an average decline of 0.4 per cent across the euro area. However, developments in euro area trading partners have been relatively encouraging since the middle of last year, with the euro area returning to growth after several quarters of contraction.
I am particularly encouraged by recent developments in our labour market. The unemployment rate, although still unacceptably high, has declined by nearly 3 percentage points in under two years to 12.3 per cent in January. Supporting this reduction in the unemployment rate has been a resumption of strong employment growth, with employment increasing by 3.2 per cent (58,000 jobs) over the year to the third quarter of last year, the highest year-on-year rate of growth in the entire EU according to Eurostat figures.
Although developments in Ireland of late have been encouraging, it is of course worth noting that we do not move in isolation. A recovery in our European partners is vital if we are to continue the recent positive momentum we have seen in Ireland and achieve sustained growth over the medium term.
68. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which it might be found possible to establish a Government development bond to generate the necessary resources to meet the demands of the housing crisis without affecting balance sheet requirements; and if he will make a statement on the matter. [8813/14]
View answerThe primary role of the National Treasury Management Agency is to ensure that sufficient funding is available at all times to meet the day-to-day requirements of the Exchequer. It is a matter for the Agency to decide when and how much to borrow in the light of those needs, commercial considerations surrounding the raising of debt on the markets and the need to maintain an appropriate level of liquidity. All monies raised through Government borrowing are paid into the Central Fund and used to fund Government spending as approved by the Oireachtas. It has never been the custom to link borrowing to specific projects as to do so would limit the flexibility of the Government in managing the State's finances.
There are a number of options available to individuals who wish to help support the Government's work in promoting economic growth and employment. The National Solidarity Bonds were introduced to provide a wider range of options for retail investors. The Minister for Finance in announcing Budget 2010 launched the 10-year National Solidarity Bond, the purpose of which was to allow citizens an opportunity to invest and provide money to the State to stimulate economic recovery and to assist in the maintenance and creation of employment. Following the success of the launch of the ten-year National Solidarity Bond a four-year National Solidarity Bond was launched in 2011.
The NTMA's other State Savings products, available through any Post Office, allow people to support the Exchequer through Savings Bonds, Savings Certificates and Instalment Savings. There are also possibilities in place for people interested in investing in longer-term Government bonds. Irish sovereign bonds are available through seventeen Primary Dealers recognised by the National Treasury Management Agency (NTMA). The NTMA has published information on their website (www.ntma.ie) which gives the names and contact details for institutions which sell bonds to the public, and the fees they charge.
70. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which GDP per capita here compares with other European countries; and if he will make a statement on the matter. [8815/14]
View answerAnnual data on gross domestic product (GDP) per capita across the EU are available from Eurostat. These figures show that in 2012, Ireland's GDP per capita adjusted for Purchasing Power Standards was €33,200, the fifth highest in Europe and third highest in the euro area, behind only Luxembourg and Austria. The level in Ireland compares to an average of €25,500 across the EU28 and of €27,500 across the euro area's then-17 Member States; comparable data on the euro area 18 are not yet available.
However, in the Irish case (as with some other Member States) the presence of a large number of foreign-owned multinationals can impact considerably on the level of GDP. The gap between GDP and gross national income (GNI) which strips out the net income generated from economic activity in Ireland but which is repatriated abroad is relatively large in Ireland (GNI also nets out transfers and subsidies from the EU). European Commission data suggest that GNI per capita (in current prices and unadjusted for price differentials between countries) in Ireland was the 8th highest of the 18 euro area Member States in 2012 and 14 per cent above the EU average.
71. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continue to monitor the activities of banking institutions now withdrawn or in the course of withdrawal from this jurisdiction; the extent to which such institutions continue to have responsibility to Irish borrowers in their absence; and if he will make a statement on the matter. [8816/14]
View answerThe withdrawal of banking institutions from the Irish market must be considered against a backdrop of a comprehensive programme of bank recapitalisation and restructuring that has been underway to change the future banking landscape in Ireland and abroad. While it is disappointing that ACC and Danske Bank have taken this decision, it is noted that one of the key features of banking strategy in the financial crisis has been the retrenchment to national borders.
ACC Bank is a subsidiary of the Rabobank Group based in the Netherlands which has taken the commercial decision, as a private enterprise, to return ACC's banking licence to the Central Bank. The Central Bank does not envisage that this will occur until the second half of 2014.
The Central Bank has informed me that, since Danske Bank's original announcement of its commercial decision to withdraw existing day to day personal customer products and services on a phased basis during the first half of 2014, and also to discontinue the provision of personal and business banking products to new customers, the Central Bank has been in communication with Danske Bank. Under the Central Bank's Consumer Protection Code, banks are required to give a minimum of 2 months' notice before they close a consumer's account. It is important that consumers are given adequate notice to allow them to take the required steps to close or transfer their accounts. Danske has confirmed that it provided this required notice in December last for those accounts closing in February and also that it issued reminder letters.
I wish to highlight that all banks providing current accounts in Ireland are subject to the Central Bank's Current Account Switching Code, which is designed to make the process of switching current accounts easier and quicker and to offer protection and support for consumers when switching bank account. The Switching Code places obligations and time limits on both the old and the new bank when completing the switching process. Where accounts include credit facilities, such credit facilities will be subject to the credit assessment process applicable at the receiving bank.
Customers with any concerns or questions about their accounts are advised to contact Danske Bank on telephone 1890 866 866 for Personal Banking and 1890 866 860 for Business Banking. Other information is available on Danske Bank's website www.danskebank.ie. If customers have made a complaint to Danske Bank and are not satisfied with the outcome, they have the right to refer the complaint to the Financial Services Ombudsman.
