Dáil Éireann Debate, Wednesday - 13 May 2020
92. Deputy Michael McGrath asked the Minister for Finance the SSM rules regarding non-performing loans; the definition of a non-performing loan or exposure; the amount of capital that a bank must set aside for loans that turn non-performing; if the ECB or the EBA are reviewing the rules in view of the Covid-19 outbreak; and if he will make a statement on the matter. [5079/20]
View answerThere is a detailed regulatory framework in place for the banking sector which establishes how they classify non-performing loans and the capital they must set aside for loans that turn non-performing.
In general, a loan is defined as non-performing if a customer is assessed as unlikely to pay or repayments on a loan are more than 90 days past-due.
It is important to note that banks must adhere to the Code of Conduct on Mortgage Arrears (CCMA) which provides a strong consumer protection framework, aimed specifically at the process to be followed by lenders, to ensure borrowers in arrears on a mortgage loan are treated in a timely, transparent and fair manner.
The ECB and EBA have made a number of announcements recently, which set out welcome regulatory flexibility to ensure that the banking sector can support their customers who experience repayment difficulty due to the COVID-19 Pandemic.
In particular, the EBA has clarified that payment moratoria, such as the one adopted by the banking sector in Ireland, should not automatically result in the reclassification of the loan as non performing.
I understand that the Central Bank is engaging with the banking sector and expects banks to take a consumer-focused approach at this worrying time for their customers. Where flexibility is provided for within the various obligations, the Central Bank will consider the application of this within the broader European framework.
The Central Bank has also announced that borrowers who receive a COVID-19 payment break will not have it recorded as missed payments on their record held by the Central Credit Register.
