Joe McHugh
Ceist:23. Deputy Joe McHugh asked the Minister for Finance if he will discuss the upcoming Finance Bill with reference to demand-side economic stimulus measures. [49074/13]
Amharc ar fhreagraEconomic Growth Initiatives
Ceisteanna (23)
Freagraí scríofa
I would inform the Deputy that I announced 25 measures for jobs and growth in my Budget 2014 speech. The measures are designed to promote entrepreneurship, stimulate investment, finance growth, encourage innovation, improve cash flow and protect compliant business by tackling the shadow economy. They are targeted in particular at the tourism and hospitality sector, the construction and building sector, the farming/agriculture and food sector and the film industry. Full details of these measures, many of which will be given legislative underpinning by Finance (No.2) Bill 2013, are set out in Annex C of the Budget book. This is available via my Department's website.
Banking Sector
Ceisteanna (24, 69)
Bernard Durkan
Ceist:24. Deputy Bernard J. Durkan asked the Minister for Finance the future role he sees for lending institutions here that have closed down their business in the domestic market but have remained open to the corporate or investment sectors; if the banking licence in such cases is likely to be restricted in the future; and if he will make a statement on the matter. [49208/13]
Amharc ar fhreagraBernard Durkan
Ceist:69. Deputy Bernard J. Durkan asked the Minister for Finance the role he sees for redundant banks that have ceased to trade in the domestic market but have remained open to investment in corporate sectors; and if he will make a statement on the matter. [49794/13]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 24 and 69 together.
A banking licence allows the holder to undertake certain business activities set out in Annex I of Directive 2006/48/EC, which has been transposed into Irish law by the Central Bank Act 1971, the amended S.I. 395 of 1992, S.I. 661 of 2006 and S.I. 475 of 2009. It is a matter for the licence holder as to which of the permitted activities it will undertake and therefore a decision not to undertake certain forms of business activity will not affect the licence.
While it is disappointing that ACC and Danske Bank have taken the decision to withdraw from the Irish market one of the key features of banking strategy in the financial crisis has been the retrenchment to national borders. One of our expectations from the financial crisis is that market shares in traditional banking services will become more fluid during the recovery as the banking landscape continues to adjust to the withdrawal of foreign players, the restructuring of our incumbent banks and the increasing price transparency within financial services. The withdrawal of particular services and closure of certain aspects of the business of some banks is a realisation of this expectation.
We expect that over time this will present opportunities in the market for the entry of new market participants well positioned to be confident in the future profitability of an Irish branch or subsidiary. While the current market may not be attractive to a fully diversified bank challenger in the short term, I would expect new financial services providers to enter the market on a more targeted basis – such as specialised lenders and non-bank finance providers.
Banking Sector
Ceisteanna (25)
Michael McGrath
Ceist:25. Deputy Michael McGrath asked the Minister for Finance his view of the level of competition in Irish banking sector for both personal and business customers; the actions that can be taken to improve the level of competition; and if he will make a statement on the matter. [49203/13]
Amharc ar fhreagraFreagraí scríofa
I fully accept that the level of competition in the Irish banking sector has reduced with the recent decisions by ACC and Danske Bank to withdraw, following the withdrawal of Bank of Scotland (Ireland) some time ago. This is consistent with a trend evident through the course of the financial crisis of retrenchment to national borders.
Over time, I expect that the restructuring of the banking sector and the recovery of the economy will present opportunities for the entry of new market participants well positioned to be confident in the future profitability of an Irish branch or subsidiary.
This Government has been working hard to create an environment conducive to the entry of such new entrants through a number of initiatives and have been leading the debate at EU level on the mechanisms to promote alternative forms of financing for SMEs.
It is important that we establish a level playing field for all banks if they will be willing to enter the Irish market and compete. In this regard:
- we are working to manage and minimise potential market expectations of future State support for the state owned banks which could act as a deterrent to new market entrants;
- we are working to establish a level playing field in the assessment of credit risk through the establishment of an industry wide credit register to allow for the appropriate measure of risk in lending, allowing incumbent and new lenders to lend with full visibility of the risk of that lending;
- we are working to reduce switching costs to allow customers to move between banks more easily, enhancing competition and forcing banks to work hard to retain their customers on a commercial basis;
- we are encouraging risk sharing partnerships to encourage new lending, such as the AIB / European Investment Bank lending initiative;
- we are in regular dialogue with potential market entrants as they evaluate potential opportunities in Ireland and will be supportive of new entrants as they emerge.
The recent RBS review by the UK Government confirms the continuing role that Ulster Bank will have in the lending and deposit taking business for all customers here in Ireland. KBC have been expanding their network and their ambitions in Ireland. I think that it is fair to say that it is not all bad news and that the Irish financial market does offer opportunities to institutions. This Government has also taken steps to ensure that the Irish financial market is accessible to any financial institution considering establishing in Ireland. In seeking to reduce the barriers to entry which are specific to the Irish banking market, Section 149 of the Consumer Credit Act, which provides for the regulation of bank fees and charges has been disapplied for three years in the case of new financial service providers setting up in Ireland.
IBRC Mortgage Loan Book
Ceisteanna (26)
Richard Boyd Barrett
Ceist:26. Deputy Richard Boyd Barrett asked the Minister for Finance if his attention has been drawn to the concerns of Irish Bank Resolution Corporation, formerly Anglo Irish Bank, mortgage holders regarding plans to dispose of these mortgages as part of the wind-up of IBRC; and if he will make a statement on the matter. [49256/13]
Amharc ar fhreagraFreagraí scríofa
The Special Liquidators have given significant consideration to and have sought independent advice from PWC in relation to how the residential mortgage portfolio and other loans in IBRC are to be dealt with. Following that independent advice, the Special Liquidators have decided that the residential mortgage book would be split into four segments consisting of performing, non-performing, owner occupier and buy to let mortgages. The Special Liquidators have confirmed that all Borrowers are permitted to buy-out their mortgage at par value and that there are no legislative barriers for such Borrowers to do so. The Special Liquidators have also confirmed that the residential mortgage customers of IBRC Limited (in Special Liquidation) continue to enjoy the protection of the Central Bank Code of Conduct on mortgage arrears and other protections in Irish consumer law.
I am advised by the Special Liquidators that the decision to offer the residential mortgage book for sale in this way was arrived at having regard to the scale of the process and size of the IBRC loan book. Furthermore the Special Liquidators have confirmed that the decision to sell these loans as part of a portfolio is the most efficient method of disposal and the one which is most likely to maximise ultimate sales realisations for the Special Liquidators having regard to the public interest.
The decision concerning how the loans will be packaged for sale and what bidders constitute qualifying bidders for the purposes of the sales process is to be made by the Special Liquidators and I will not intervene in this matter.
Food Securities Regulation
Ceisteanna (27)
Denis Naughten
Ceist:27. Deputy Denis Naughten asked the Minister for Finance the steps being taken to regulate food securities trading on the stock market; and if he will make a statement on the matter. [49225/13]
Amharc ar fhreagraFreagraí scríofa
Proposals to regulate food securities at an EU level form part of the current MiFID II and MiFIR proposals which aim to make financial markets more efficient, resilient and transparent, and to strengthen the protection of investors. The Irish Presidency achieved a Council General Approach on this file which has enabled the Lithuanian Presidency to commence the next stage of the legislative process, which is the engagement, via Trilogues, with the European Parliament and the European Commission.
Under the current MiFID II proposals, the level of exemptions available has been reduced and more products will be defined as derivative financial instruments when compared with MiFID I, and will therefore fall within the scope of MiFID II and other financial legislation such as Market Abuse. MiFID II also contains important provisions relating to position management, position limits and product intervention. These provisions are in respect of all financial instruments, including commodity derivatives, and have the purpose of providing regulators with tools to avoid excessive speculation in financial instruments, including commodity derivatives. The Council is proposing that competent authorities will be obligated to establish and apply position limits on the size of a position in a commodity derivative which a person can have over a specified period of time.
Furthermore, subject to the final agreement between the co-legislators, competent authorities will have product intervention powers whereby they may prohibit or restrict trading of financial instruments or prohibit or restrict investment activities when there is a threat to the orderly functioning and integrity of financial markets or commodity markets. The European Securities and Markets Authority (ESMA) will have contingency and coordination powers in position management and product intervention to ensure consistent application across all Member States. In the exercise of its powers, ESMA will also have to consult public bodies competent for the oversight, administration and regulation of physical agricultural markets.
MiFID contains important provisions which set out new rules for commodity derivative markets. However, the regulation of commodity derivative markets, including where they take place Over the Counter (OTC) and as they are related to the physical commodity markets, must be assessed based on how they are dealt with across the totality of financial services files.
In relation to the scope of EU financial services legislation on commodity and related derivative markets, it should be noted that the MiFID file, along with the Market Abuse Regulation (MAR) agreement secured under the Irish Presidency, and the European Market Infrastructure Regulation (EMIR), provide for a much stronger legislative framework in relation to commodity derivative markets.
We will continue to monitor developments on this file throughout the legislative process.
Mortgage Arrears Proposals
Ceisteanna (28)
Michael McGrath
Ceist:28. Deputy Michael McGrath asked the Minister for Finance the progress being made under the mortgage arrears resolution programme; if he is concerned by the significant rise in home repossession cases before the courts during October; and if he will make a statement on the matter. [49202/13]
Amharc ar fhreagraFreagraí scríofa
The implementation of sustainable mortgage arrears strategies and solutions by individual banks for their distressed customers, with Central Bank oversight, is a key element of the Government’s overall framework to address the mortgage arrears problem. The Central Bank’s initiative, called Mortgage Arrears Resolution Targets (MART) announced last March, set time bound and measurable targets for the main banks, requiring them to systematically address their arrears book. This is a very important step to resolve the impasse on arrears. The Central Bank initially required the main mortgage lenders to propose by end-June sustainable solutions to 20% of mortgages in arrears (over 90 days). The target rises to 30% by the end of September, 50% by the end of December 2013 and 70% by end of March 2014. The Central Bank is now also requiring banks to conclude sustainable solutions with 15% of their customers by the end of this year and 25% of their customers by the end of March next year. The initial results of the Central Bank’s audit of the banks’ end of June target will be available shortly. This will provide an independent assessment on the compliance by the banks with all the MART requirements.
As the Deputy is aware, the Central Bank publishes quarterly statistics on the level of mortgage arrears. To date 79,357 primary dwelling houses (PDH) mortgages have been restructured as of June 2013 of which over 60,000 of restructured PDH accounts were deemed to be meeting the terms of their arrangement. The Central Bank has informed me that updated data for September 2013 is due for publication by the end of November.
Separately from Central Bank quarterly reports, my Department is now publishing monthly data on primary home mortgage restructures put in place by the six main lenders covered by the Central Bank’s MART. This will place more timely information in the public domain in relation to progress by the main banks to sustainably resolve mortgages in difficulty. The recently published data for the end of September shows that the number of PDH mortgage accounts in arrears of greater than 90 days has fallen from 82,624 to 81,156, a drop of 1,468 accounts.
My colleague, the Minister for Justice has informed me that there was an initial spike in the number of Civil Bills before the courts following the passing of the Land and Conveyancing Law Reform Act 2013 in July. However the Courts Service has indicated that, since the initial spike in issuing of Civil Bills, the situation has stabilised and there has been no further spike in the issuing of Civil Bills. It is however important to point out that the issuing of a Civil Bill does not automatically lead to a repossession, for example a borrower who has not been engaging with his lender may reengage following the issuing of a Civil Bill and this may lead to an alternative outcome.
The mortgage arrears problem is a major problem that needs to be resolved for the long term economic and social health of the country and the Government has now put in place a comprehensive strategy to tackle the problem .
Property Taxation Data
Ceisteanna (29)
Lucinda Creighton
Ceist:29. Deputy Lucinda Creighton asked the Minister for Finance the role he and his Department have in determining the distribution of the local property tax revenue in 2014; the reason a decision was taken to postpone the retention of 80% of the property tax in the local authority area in which it is collected; and if he will make a statement on the matter. [49257/13]
Amharc ar fhreagraFreagraí scríofa
Section 157 of the Finance (Local Property Tax) Act 2012, as amended, provides that, in each financial year commencing with 2014, the Minister of Finance shall pay from the Central Fund or the growing produce thereof into the Local Government Fund an amount equivalent to the Local Property Tax, including any interest paid thereon, paid into the Central Fund during that year. I have no role in determining the distribution of the local property tax receipts in 2014 or in any other year. This is, along with policy on the proposed level of retention by each local authority, a matter for my colleague the Minister for the Environment, Community and Local Government, in the first instance.
To this end I would draw the Deputy’s attention to the answer to a very similar question, parliamentary question number 109, provided to her by Minister Hogan last week on 14 November.