The Central Bank of Ireland ("CBI") has informed me that seven banks in Ireland will have to pay €17.6 million between them to meet the costs of the Comprehensive Assessment conducted by the ECB and the CBI to review their assets and test the resilience of their balance sheets to certain stress situations. The CBI also notes the following:
- Whilst, the Irish Banking system being assessed is relatively small in terms of balance sheet size versus the outer countries, it was in the top 5 countries in terms of loan files to be reviewed and collateral to be valued - the most expensive element of an Asset Quality Review ("AQR");
- In terms of banks, the CBI also had to conduct the Asset Quality Review for ACC (part of Rabobank), KBC Ireland (part of KBC Group) on a host basis, thus in cost terms were conducting the AQR for 7 banks;
- The CBI has extensive previous experience with balance sheet assessments and stress tests. Consequently it used exclusively internal expertise to conduct quality assurance on the data received from banks before it was passed to the ECB. It was then not necessary to utilise third parties to perform this function, resulting in a saving;
- All project management operations were carried out using the internal resources of the Central Bank or secondees, also resulting in a saving, due to it not being necessary to utilise third parties to perform this function, as can often be necessary;
- The CBI saved significant cost by utilising the file review results from the Balance Sheet Assessment (conducted in late 2013) where possible in this exercise (for Bank of Ireland and AIB);
The costs noted above exclude costs which may have been incurred by the banks themselves, details of which are confidential and commercially sensitive.