Dáil Éireann Debate, Thursday - 2 February 2017
93. Deputy Michael McGrath asked the Minister for Finance if his consent is required for the sale by a bank (details supplied) of certain non-performing loan books; and if he will make a statement on the matter. [5109/17]
View answerAs the deputy is aware non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM).
In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. This has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable payment plan which allows the customer an achievable path out of arrears, as well as protecting the value of the loan for the bank. In the vast majority of cases this achieves the best outcome for all involved.
Despite this progress, the level of NPLs in the Irish banking sector remains well above the European average. Hence the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge. In recent years banks have introduced multiple engagement channels to facilitate those customers who are reluctant to engage directly with them. Having exhausted these initiatives, if meaningful engagement is not forthcoming from particular customers the bank may be left with no option but to look at alternative solutions which could, as a last resort, include the sale of the loan.
As the deputy is aware, in the case of AIB the relationship between the Minister for Finance and the bank is governed by a Relationship Framework Agreement which can be found here: http://www.finance.gov.ie/sites/default/files/Allied-Irish-Banks1.pdf. I would point out to the deputy that there are only a small number of matters which require Ministerial consent such as the appointment of the CEO and Chairman of the Bank. The disposal of loans is a commercial decision for the management and Board of each individual institution and is not subject to Ministerial consent, as I have no role in the day-to-day commercial and operational decisions of any of the banks' in which the State has a shareholding.
The Relationship Framework Agreement also sets out the criteria for determining which matters require Ministerial consultation which include 'material' matters and states that a matter should be deemed 'material' if "it is an acquisition, investment or disposal other than in the ordinary course of business and the total purchase price, investment or proceeds is likely to exceed €100 million". Therefore if the bank decided to sell a loan book with a value over €100m then I, as Minister, would need to be consulted.
