Banks Recapitalisation

Thursday, 4 October 2012

Ceisteanna (78)

Thomas Pringle

Ceist:

78. Deputy Thomas Pringle asked the Minister for Finance if he will provide a breakdown of the way the €7.5 billion given during the banks recapitalisation for mortgage debt has been used; which banks received this capital and the amount of this has been used to deal with the mortgage debt crisis. [42440/12]

Amharc ar fhreagra

Freagraí scríofa

Minister for Finance

As the Deputy will be aware, the Irish banks were required to raise €24 billion in capital following the 2011 Prudential Capital Assessment Review to remain above a minimum capital target of 10.5% Core Tier 1 in the base scenario and 6% Core Tier 1 in the stress Scenario. The Central Bank made its decision on required recapitalisation based on loan-loss projections along with further calculations concerning the prospective income, expenditure, and deleveraging plans of the banks as outlined in the 2011 Financial Measures Programme Report. To arrive at a stressed loan-loss estimate that was fully credible to the international markets, the Central Bank engaged BlackRock Solutions, a specialist in analysing potential loan losses under stressed conditions. I reiterate that the stress test scenarios were designed to represent extreme but plausible events, but were not forecasts. In terms of mortgages, the Central Bank has informed me that the following projected losses for the period 2011-13 were used for capital determination purposes:

€million	-	AIB	-	BOI	-	ILP	-	EBS	-	Total
Type	Base	Stress	Base	Stress	Base	Stress	Base	Stress	Base	Stress
Residential Mortgages	€2,005 million	€3,066 million	€1,361 million	€2,366 million	€1,624 million	€2,679 million	€848 million	€1,380 million	€5,838 million	€9,491 million
Total	€9,545 million	€12,604 million	€7,380 million	€10,119 million	€2,114 million	€3,421 million	€975 million	€1,577 million	€20,014 million	€27,722 million

In terms of troubled mortgage customers, the Central Bank is now engaging with all regulated mortgage lenders to ensure that each lender has appropriate strategies and plans to deal appropriately with all its customers experiencing mortgage difficulties. In addition, the protections of the Central Bank’s Code of Conduct on Mortgage Arrears will continue to be available to co-operating borrowers who are experiencing difficulty on their mortgage in respect of their principal private residence.