Dáil Éireann Debate, Tuesday - 27 March 2018
92. Deputy Paul Murphy asked the Minister for Finance his views on mortgage write-downs for mortgage holders in view of the willingness of a bank (details supplied) to offer a discount on loans it transfers to vulture funds; and if he will make a statement on the matter. [13664/18]
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. As part of the CCMA’s Mortgage Arrears Resolution Process (MARP) each bank has developed a suite of forbearance treatments and resolution strategies. Such treatment strategies include arrears capitalisation, reduced payments, split mortgages and voluntary sale for loss which may involve an element of debt write off.
There is no ‘one size fits all’ approach to restructuring mortgages and clearly each borrower’s solution is tailored to their own personal circumstances and is anchored in an assessment as to their level of affordability. It is also not for me as Minister to determine how bank's should design and implement their impairment and write-off policies. But in each case the core objectives remains the same that is to ensure that arrears solutions are sustainable in the long term and that they comply with the spirit and the letter of all regulatory requirements.
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.
