The Deputy will be aware that I, in my role as Minister for Finance, have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution.
Notwithstanding the State's shareholdings in the banks, I must ensure that the banks are run on a commercial, cost effective and independent basis to ensure their value as an asset to the State. A Relationship Framework has been specified that defines the nature of the relationship between the Minister for Finance and each bank. These Frameworks were published on 30 March 2012 and can be found at http://banking.finance.gov.ie/presentations-and-latest-documents.
However from a general policy perspective, the approach of the Government is to support people in genuine mortgage arrears and where feasible, to put in place a sustainable restructure to address and resolve such a difficulty. This is clearly set out in the Code of Conduct on Mortgage Arrears where it requires a lender in respect of a cooperating borrower to explore all of the options for an alternative repayment arrangement offered by that lender and that a lender must document its consideration of each option examined and the reasons why the options offered/not offered to the borrower are/are not appropriate and sustainable.
If a solution cannot be agreed between borrower and lender, or if it is agreed that a mortgage restructure is not a sustainable solution, there are alternative mechanisms available to allow a debtor remain in the house in appropriate cases. For example, the Mortgage to Rent scheme is available in cases where the house and household would be appropriate and eligible for social housing. Where the borrower and lender cannot agree on a sustainable mortgage restructure, the debtor has the option to formulate and propose a PIA to his/her secured and other creditor(s). This initiative rests solely with the debtor and in formulating a PIA, a personal insolvency practitioner is under an onus, insofar as is reasonably practicable, to formulate the proposal on terms that will not require the debtor to dispose of an interest in or cease to occupy a principal private residence.
I also note, BOI's focus on the resolution of Irish mortgage and business related loans, by agreeing suitable and sustainable solutions, and the progress the bank has made in this regard. In its 2014 annual report, BOI has stated that more than nine out of ten of its challenged owner occupied mortgage customers in Ireland with restructuring arrangements are meeting the agreed repayments. It is also worth noting that BOI met the targets set by the CBI in relation to addressing mortgage arrears.
At the time of announcing its 2014 full-year results, Bank of Ireland management stated that it was prioritising the capital it was generating to facilitate the de-recognition of the 2009 preference shares. The remaining 2009 preference shares stand at €1.3bn. Furthermore, management has stated that following de-recognition of the preference shares its ambition is to progress to payment of dividends.
Notwithstanding the fact that management has indicated that the accelerated pace of the bank's capital build has ensured that it is firmly on track to de-recognise the 2009 preference shares in 2016, it will be some time before there is clarity around the robustness of the bank's capital position which would allow such a de-recognition to take place and subsequently the commencement of dividends. In addition the SSM, as regulator, would have to satisfy itself, at the appropriate time, as to the bank's dividend capacity in the context of its overall capital position. Accordingly, I am not willing to speculate on how any plan the bank has in relation to dividends might evolve.
