Dáil Éireann Debate, Tuesday - 27 March 2018
91. Deputy Paul Murphy asked the Minister for Finance the contacts he has had with the European Central Bank in relation to the regulation of the banks' number of distressed mortgages; and if he will make a statement on the matter. [13663/18]
Amharc ar fhreagraAs 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.
I have indicated recently that officials in my Department met with staff of the SSM at the highest level on two occasions in the past year and they outlined the background and history to the restructuring effort in Ireland and the progress the Irish banks have made in dealing with NPLs. Officials have also been involved in the various European committees and working groups that have been looking at this issue in recent times. Finally there was also regular and extensive contact between my officials and the ECB over the years of the external assistance programme.
