I propose to take Questions Nos. 49 and 50 together.
The Deputy will be aware that the reduction in the level of non-performing loans (NPLs) across European banks is a major priority for the banking regulator, the SSM. The Irish banks have made huge progress in this regard since the height of the crisis. According to the Central Bank of Ireland, the average NPL ratio of the domestic Irish banks was 7% at end-June 2019 having stood at more than 30% at peak in 2013. In volume terms, NPLs in the domestic Irish banks have now fallen by €70.2 billion (82%) from peak in 2013. A major contributor to this has been the almost 109,000 mortgage restructures, including split mortgages, which are currently in place.
Despite this progress, more work is required before the NPL ratios at the Irish banks reach the European average of under 4%.
It is important to reiterate that the protections in place for all borrowers before a sale remain unchanged. For example, Start Mortgages and Pepper, the firms involved in the loan sales transacted by PTSB since 2018, are both regulated by the Central Bank of Ireland. When dealing with borrowers, these firms are required to comply with the Consumer Protection Code and the Code of Conduct on Mortgage Arrears. Furthermore, assurances have been given that the terms of a restructure agreed before these sales took place will continue to be honoured.
In addition, in 2018 I asked the Central Bank to carry out a review of the CCMA to ensure it remains as effective as possible. The result of this review was published last October and it is encouraging to note that the key findings included confirmation that for borrowers who engaged with the process, the CCMA is working effectively as it is intended in the context of the sale of loans by regulated lenders.
In relation to your question on the classification of certain mortgages as NPLs, this is a matter for the banks to determine on a case-by-case basis. In making this determination, the Central Bank has previously confirmed that "credit institutions are required to comply with a range of classification requirements including the Regulatory definition of default as per Article 178 of the Capital Requirements Regulation; the Accounting definition of impaired as per the applicable accounting framework, and the Supervisory definition of non-performing as per the EBA ITS* on forbearance and non-performing exposures."
Finally, I wish to highlight that I cannot stop loan sales, even by the banks in which the State has a shareholding. These decisions are the responsibility of the Board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks, which are legally binding documents that I cannot change unilaterally.
*ITS - Implementing Technical Standard.