Dáil Éireann Debate, Wednesday - 23 May 2012
55 Deputy Robert Troy asked the Minister for Finance if he is satisfied that the projected worst case scenario of losses in the Prudential Capital Assessment Review 2011 for the covered banks of €9 bn on their mortgage books over the period 2011 to 2013 will not arise; and if he will make a statement on the matter. [25582/12]
Amharc ar fhreagraThe solvency stress test applied by the Central Bank of Ireland in 2011 was used to recapitalise the PCAR banks. Having consulted with the Central Bank, I can inform the Deputy that the stress test scenarios were designed to represent extreme but plausible events, but they were not forecasts. The macroeconomic environment deteriorated in 2011 and as a result arrears levels and loan loss provisioning has increased. As the realised scenario in 2011 was within the bounds considered for the purposes of recapitalising the banks in 2011, I am currently of the view that the banks are adequately capitalised.
The level of loan loss provisions at end-2011 is a result of both increasing arrears and the more conservative approach to impairment provisioning which has resulted in a front-loading of provisions. Notwithstanding the additional and significant provisions recognised in 2011 financial statements, loan arrears on aggregate remain within the PCAR 2011 stress case parameters.
The Central Bank continues to monitor arrears levels, impairment provisions and capital adequacy as well as implementing a number of arrears related work-streams. Additionally, the Government undertakes intensive efforts to address the mortgage arrears problem and has established a special Cabinet sub-committee to be chaired by the Taoiseach. The Government is committed to assisting those who genuinely cannot pay their mortgage through carefully targeted measures.
