Dáil Éireann Debate, Tuesday - 27 March 2018
176. Deputy Joan Burton asked the Minister for Finance his definition of non-performing loans; if it includes loans that have been restructured where the borrower has adhered to the conditions of the restructured loan; and if he will make a statement on the matter. [13666/18]
Amharc ar fhreagraIn answering the Deputy’s question, it is useful if I start by giving some historic context. During the height of the financial crisis a key focus of the authorities was on stabilising and ultimately reducing mortgage arrears through the implementation of sustainable mortgage solutions that were agreed with borrowers.
This led to the Central Bank of Ireland (CBI) introducing public mortgage arrears resolution targets (MART) for the banks in H1 2013. As the MART process was rolled out a split mortgage solution or a part capital and interest solution that met certain criteria were accepted by the CBI as being sustainable for the purposes of these targets.
Since the establishment of the Single Supervisory Mechanism (SSM) in November 2014, the focus has shifted from reducing mortgage arrears levels to reducing Non-performing Loans (NPLs). This shift in focus has been accompanied by a new strict definition Europe-wide of what constitutes an NPL by the European Banking Authority (EBA) which means that certain restructures are deemed NPL even if customers are meeting the revised payment schedule.
Officials in my Department met with staff of the SSM at the highest level on two occasions since late 2016. In the course of their discussions they outlined the background and history to the restructuring effort in Ireland and questioned the logic of now classifying some types of restructured loans, including certain split mortgages, as NPL indefinitely.
While my Department has been informed that the SSM is looking into the regulatory treatment of split mortgages across a number of European member states I have no evidence at this point that this categorisation is going to change.
Aside from direct interaction with the SSM, Department officials have also been actively involved in the discussions on NPLs through its involvement in the European Council’s Financial Services Committee subgroup on NPLs, and the more recent European Commission Expert Group on NPLs. While this has ensured that Ireland’s views are voiced and considered on the matter, ultimately the final arbiter on the resolution of NPLs for the Irish banks is the SSM.
