Michael McGrath
Ceist:76. Deputy Michael McGrath asked the Minister for Finance if his prior approval is required before the disposal of loans by Permanent TSB; and if he will make a statement on the matter. [15056/15]
Amharc ar fhreagraBank Restructuring
Ceisteanna (76, 77)
Michael McGrath
Ceist:77. Deputy Michael McGrath asked the Minister for Finance if the restructuring plan for Permanent TSB requires it to dispose of part of its mortgage book; the criteria it will apply in deciding which loans will be disposed of; the implication of such a sale for its customers; and if he will make a statement on the matter. [15057/15]
Amharc ar fhreagraFreagraí scríofa
I propose to take Questions Nos. 76 and 77 together.
As the Deputy is aware, Permanent TSB has published details of the key elements of the Restructuring Plan on its website at http://otp.investis.com/clients/uk/irish/rns/regulatory-story.aspx?cid=121&newsid=504083.
As part of the Restructuring Plan, Permanent TSB will commit to reduce the value of defaulted Irish tracker mortgages through a combination of measures, including cures and asset sales by a predetermined date and according to a predetermined schedule.
I have been informed by Permanent TSB that it is its clear preference to reduce the value of defaulted Irish tracker mortgages by way of completed treatments in order to cure the defaulted loans rather than by other means. If the target cannot be met through this approach or other means, then Permanent TSB would be required by the Restructuring Plan to sell such loans within the predetermined timelines.
Under Clause 11 of the Relationship Framework, Permanent TSB would be obliged to consult with me prior to a disposal, outside the ordinary course of business, of a loan/loans for an amount in excess of €50 million. In the Relationship Framework it is recognised that Permanent TSB remains a separate economic unit with independent powers of decision and that its Board and management team retain responsibility and authority for determining Permanent TSB's strategy and commercial policies and conducting its day-to-day operations. The consultation would carefully assess, at that particular point in time, the matter based on the facts and in particular the impact on Permanent TSB's profit, capital and funding and compliance with Restructuring Plan commitments.
The Deputy may also be aware that The Consumer Protection (Regulation of Credit Servicing Firms) Bill 2015 was published in January and second stage of the Bill was taken in the Dáil on 4 February. Since then, my officials have been in contact with the Central Bank and with the Office of the Attorney General to further progress the legislation.
It remains my intention to ensure that borrowers whose loans are sold by a regulated entity to a currently unregulated entity maintain the same protections as they had prior to the sale. The Bill will continue its progress through the legislative process and I look forward to further discussion of the Bill at Committee Stage.
The legislation is not retrospective. However, it will apply to all loans as defined, regardless of when they were acquired, thus capturing loan books that have already been sold. A similar approach was used in 2013 in relation to debt management firms.
Tax Code
Ceisteanna (78)
Michael McGrath
Ceist:78. Deputy Michael McGrath asked the Minister for Finance his plans to introduce specific provision in the taxation system for seafarers, as is the case in other jurisdictions; if this is an issue his Department has examined; if his Department has an estimate of the number of Irish seafarers; and if he will make a statement on the matter. [15058/15]
Amharc ar fhreagraFreagraí scríofa
Section 472B of the Taxes Consolidation Act 1997 provides, subject to certain conditions, for an annual income tax allowance of €6,350 for seafarers.
The allowance is conditional on a seafarer being at sea for at least 169 days in a tax year. The duties must be wholly performed aboard sea-going ships on an international voyage. A sea-going ship is one that is registered in the relevant Register of a Member State and is used solely for the trade of carrying, by sea, passengers or cargo for reward. An international voyage is a voyage that begins or ends in a port outside the State.
The most recent year for which figures are available is 2012, when a total of 200 claimed the seafarer's allowance at a cost to the Exchequer of €0.4 million.
An exemption from employer's PRSI is also available in respect of qualifying companies who employ seafarers. Further details on this exemption are available from the Minister for Social Protection.
My Department does not have an estimate of the number of Irish seafarers. However, the information may be available to the Department of Agriculture, Food and the Marine.
Mortgage Interest Rates
Ceisteanna (79)
Finian McGrath
Ceist:79. Deputy Finian McGrath asked the Minister for Finance his views on correspondence (details supplied) regarding a mortgage issue; and if he will make a statement on the matter. [15075/15]
Amharc ar fhreagraFreagraí scríofa
Firstly, I must confirm to the Deputy that the lending institutions in Ireland - including those in which the State has a significant shareholding - are independent commercial entities. I have no statutory role in relation to regulated financial institutions passing on the European Central Bank interest rate change or to the mortgage interest rates charged. It is a commercial matter for each institution concerned. It is not appropriate for me, as Minister for Finance, to comment on or become involved in the detailed mortgage position of mortgage holders.
Nonetheless, the issue of regulation of interest rates remains a policy area under active review and has been the subject of recent correspondence between the Department of Finance and the Central Bank. The current position is that the Central Bank does not have new proposals for the additional regulation of interest rates.
The Central Bank has responsibility for the regulation and supervision of financial institutions in terms of consumer protection and prudential requirements and for ensuring ongoing compliance with applicable statutory obligations. The Central Bank has no statutory role in the setting of interest rates by regulated entities, apart from the interest rate cap imposed on the credit union sector in accordance with the provisions of the Credit Union Act, 1997 and the requirement to be notified of penalty or surcharge interest imposed in respect of arrears.
As I have stated in previous Parliamentary Questions, a former Deputy Governor indicated that, within its existing powers and through the use of persuasion, the Central Bank would continue to engage with specific lenders which appear to have standard variable rates set disproportionate to their cost of funds and this is a course of action I expect the Central Bank to continually appraise.
The Deputy should be aware that the Governor of the Central Bank, Patrick Honohan, in his opening statement to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform last November stated that in Ireland, as in most advanced economies, it has long been understood that tight administrative control over the rates charged by banks would be counterproductive in ensuring a sufficient flow of properly priced credit on a lasting basis. Such control would strongly discourage new entrants when, in fact, ongoing competition in the banking sector will be crucial in ensuring that the economy is provided with efficient and cost effective banking services. In this regard, there have been some movements on mortgage interest rates of late by a number of institutions which suggest that the market may be entering a new and more competitive phase.
The mortgage interest rates that financial institutions operating in Ireland charge to customers are determined as a result of a commercial decision by the institutions concerned. Each institution determines the rate it charges its customers, depending on a number of factors such as cost of funds and commercial considerations (such as competition, risk pricing and the impact on deposit rates).
Furthermore, the Central Bank (Supervision and Enforcement Act) 2013 introduced changes to Section 149 of the Consumer Credit Act 1995 which regulates fees and charges in order to attract new entrants to the Irish banking sector. There is some evidence of improvements in the banking sector with a number of institutions introducing new products and adapting their business model. In the last 12 months there have been a number of new entrants to the Irish mortgage market bringing additional and welcome competition to this sector.
I should add that myself and the Governor of the Central Bank meet regularly, the latest of these meetings took place on 2 April. Among the items discussed was the issue of mortgage interest rates. The Governor provided an update on the ongoing work that he and his officials are carrying out on the issue of the standard variable rates charged by the lenders.
We noted that the SVRs charged in Ireland are higher than other euro area countries and have not fallen in line with ECB wholesale rates. The Central Bank will continue to research why this is the case and will publish results shortly. The Governor will update me on progress in due course.
Financial Services Regulation
Ceisteanna (80)
Willie Penrose
Ceist:80. Deputy Willie Penrose asked the Minister for Finance if consideration is being given to the introduction of legislation similar to that which has been introduced by the Financial Conduct Authority in the United Kingdom whereby it is proposed to hold persons accountable for bank failure by means of a presumption of responsibility rule, which requires senior managers to demonstrate, where a firm is guilty of misconduct, that they took such steps as a person in their position could reasonably be expected to take to avoid it happening; and if he will make a statement on the matter. [15085/15]
Amharc ar fhreagraFreagraí scríofa
In 2011 the new Fitness and Probity regime was rolled out by the Central Bank in accordance with the provisions of the Central Bank Reform Act 2010. The regime provides for new powers to be exercised by the Central Bank to ensure the fitness and probity of nominees to key positions within financial service providers and of key office-holders within those providers.
The Central Bank has published non-statutory guidance to assist regulated financial service providers in complying with their obligations under Section 21 of the Central Bank Reform Act 2010 in relation to the Fitness and Probity Standards. The guidance outlines the steps which the Central Bank expects regulated financial service providers to take in order to satisfy themselves on reasonable grounds that individuals performing controlled functions, including pre-approval controlled functions, are in compliance with the Fitness and Probity Standards.
The operation of the Single Supervisory Mechanism now provides that the task of assessing the fitness and probity of key individuals is shared with the European Central Bank in respect of all significant credit institutions including all of our main banks.
There are no current proposals from the Central Bank or the SSM for a Presumption of Responsibility provision. However, taking account of the conclusions that emerge from the Banking Inquiry my Department will review any issues arising in respect of the overall regulatory framework.
For the Deputy's information, the UK Banking Reform Act 2013 replaced the Approved Persons Regime for banks, building societies and credit unions with a new regulatory framework for individuals. The new framework comprises two regimes, a 'Senior Managers Regime' and a 'Certification Regime', which aim to encourage individuals to take greater responsibility for their actions and make it easier for both firms and the regulators to hold individuals to account.
The UK Financial Conduct Authority (FCA) has also announced that it is consulting on further, more detailed guidance on how the FCA will apply the Presumption of Responsibility. Under the Presumption of Responsibility, when a relevant/authorised firm contravenes a relevant requirement then the Senior Manager with responsibility for the management of any of the firm's activities in relation to which the contravention occurred is guilty of misconduct, unless they satisfy the relevant regulator that they took such steps as a person in their position could reasonably be expected to take to avoid the contravention occurring or continuing. The proposed guidance sets out the circumstances in which the FCA would seek to apply the presumption of responsibility; how the FCA would apply it and the steps that a Senior Manager should take in order to rebut the presumption of responsibility.
Banks Recapitalisation
Ceisteanna (81)
Michael McGrath
Ceist:81. Deputy Michael McGrath asked the Minister for Finance if Ireland has prepared an application to the European Stability Mechanism for retrospective recapitalisation of the banks; the earliest date on which such an application would be considered; and if he will make a statement on the matter. [15092/15]
Amharc ar fhreagraFreagraí scríofa
As you will be aware, the Euro-area Heads of State or Government (HoSG) agreed in June 2012 that "it is imperative to break the vicious circle between banks and sovereigns" and that when a Single Supervisory Mechanism, involving the ECB, is in place and operational, the European Stability Mechanism (ESM) could recapitalize banks directly.
On 8 December 2014, the ESM Board of Governors approved the creation of the Direct Recapitalisation Instrument (DRI) in accordance with Article 19 of the ESM Treaty. The operational framework for the DRI, approved on the same date, includes a specific provision in relation to the retroactive application of the instrument. The guideline states that the potential application of the instrument for this purpose should be decided on a case-by-case basis and by mutual agreement.
However, unlike back in 2012, the ESM is no longer the only option open to us to recover the money provided to recapitalise our banks. Investors are now willing to support Irish banks again and the market value of our investments has improved accordingly. My overall objective in relation to the State's investment in the banks is to maximise the return to the Irish taxpayer over time.
In line with this objective my Department is working with AIB, the institution where €20.8 billion has been invested, on reconfiguring the capital structure. I have also appointed Goldman Sachs International to provide financial advice. The focus will be on ensuring that the best decisions are made regarding potential capital restructuring options and sequencing in order to maximise the return of cash to the State from our AIB investments over time. While this is just the start of the process, it is an essential first step on the road to recovering value for the taxpayer. All options remain on the table and it is too early to specify what steps will be taken next or indeed to put a timeline on decisions.
In relation to our Bank of Ireland investments, the Deputy will be aware that we have already made a net positive cash return from our investment in and support for the bank, while we continue to hold a valuable equity investment. Lastly in relation to ptsb, the situation there is that the company is well advanced in executing a private sector fund raising to satisfy the shortfall identified in the ECB's Comprehensive Assessment exercise.
Tax Yield
Ceisteanna (82)
Michael McGrath
Ceist:82. Deputy Michael McGrath asked the Minister for Finance if he will provide, in tabular form, the level of revenue generated for the Exchequer from both residential stamp duty and commercial stamp duty, in each of the years 2011 to 2014; the number of individual residential stamp duty cases for each year; and if he will make a statement on the matter. [15093/15]
Amharc ar fhreagraFreagraí scríofa
The information requested by the Deputy in relation to the yield from Stamp Duty on residential and non-residential property, together with the numbers of transactions, is as set out in the following tables. It is not possible to separately identify commercial property from within the broader non-residential category.
Residential Property
|
Year |
€m |
Number of Transactions |
|
2011 |
45 |
18,333 |
|
2012 |
57 |
25,177 |
|
2013 |
66 |
29,741 |
|
2014 |
102 |
42,971 |
Non-Residential Property
|
Year |
€m |
Number of Transactions |
|
2011 |
90 |
28,697 |
|
2012 |
49 |
28,045 |
|
2013 |
87 |
22,260 |
|
2014 |
173 |
22,955 |
IBRC Liquidation
Ceisteanna (83)
Michael McGrath
Ceist:83. Deputy Michael McGrath asked the Minister for Finance the amount of the settlement made by former directors of Irish Nationwide Building Society; if it was paid personally by the former directors or by an insurance company under the directors' indemnity insurance; and if he will make a statement on the matter. [15094/15]
Amharc ar fhreagraFreagraí scríofa
I have been advised by the Special Liquidators of IBRC that a mediation meeting with certain of the former directors of Irish Nationwide Building Society took place. However given that mediation is a totally confidential process, the Special Liquidators are unable to comment further on this matter.