Robert Troy
Ceist:123. Deputy Robert Troy asked the Minister for Finance his plans to block sales by financial institutions in which the State has a majority share holding to unregulated vulture funds. [11006/18]
Amharc ar fhreagraTuesday, 27 March 2018
Ceisteanna (123)
Freagraí scríofa
As the Deputy is aware Non-performing loans (NPL's) remain at an elevated level across the European banking system and addressing this issue is one of the key priorities for the Single Supervisory Mechanism (SSM). The reduction of NPL's is also being given high priority at EU level with the Commission announcing their "Action Plan to Tackle Non-Performing Loans in Europe" in July 2017. The action plan calls upon various institutions including the Commission to take appropriate measures to further address the challenges of high NPL ratios in Europe.
In Ireland significant progress has been made across the banking sector in reducing the level of NPLs since the financial crisis. Despite this progress, the level of NPLs in the sector remains well above the European average of c.5% (of gross loans). Hence in recent years the SSM has tasked the management and board of each institution with developing and implementing a strategy to address this challenge.
Progress to date in reducing NPL's has been primarily achieved by customers engaging directly with their banks and agreeing a sustainable restructure which provides the customer with an achievable path out of arrears. However in recent times, loan sales as a last resort have also been a feature of the deleveraging process. This would be in cases where meaningful engagement has not been forthcoming or affordability is not evident and in recognition of the fact that the end of the road has been reached and achieving an acceptable NPL ratio will not be possible without loan sales.
Under the Relationship Frameworks (RFs) the disposal of loans is a commercial decision for the management and Board of each individual institution and is not subject to Ministerial consent. I therefore do not have the power to stop a loan sale. These agreements are legally binding documents that I cannot change unilaterally and they were insisted upon by the European Commission to protect competition in the Irish market. While loan sales do not require my consent, banks are required to formally consult with me during the process.
Finally, it is important to highlight that the contractual terms of borrowers remain in place post any loan sale. In addition, all the protection enjoyed by borrowers under the CCMA is unaffected. In relation to buy to let or BTL mortgages, it should be noted that the rights of tenants remain unchanged if they happen to live in a property connected to a loan sale.