Tuesday, 29 September 2020

Ceisteanna (29)

Pearse Doherty


29. Deputy Pearse Doherty asked the Minister for Finance the action he has taken to address the prospect of mortgage distress for Covid-19 impacted borrowers as a shareholder in banks (details supplied); and if he will make a statement on the matter. [27127/20]

Amharc ar fhreagra

Freagraí ó Béal (8 píosaí cainte) (Ceist ar Finance)

The pandemic, as we know, has caused huge financial distress for households and businesses right across this State. In other jurisdictions, the Minister's counterparts are ensuring that many of these individuals are protected during this period. They have legislated for payment breaks, including payment breaks where interest does not accrue. Crucially, for people living in Germany today, the payment breaks last nine months and, in Portugal, Spain and Italy, they last 12 months. Yet, the Minister sat as majority shareholder in the banks and did nothing to protect these individuals, who will have a negative credit rating from the next couple of days onwards.

The banks and the Government are aware of the great challenges that are facing so many. We have put in place and released the supports that made a difference to so many at such a crucial time. Payment breaks were applied to 157,000 customer accounts over the past six months. Those related to mortgages, personal loans and SME loans, and they were a source of considerable relief to customers at a time of great uncertainty. Approximately 89,000 of these payment breaks were granted to mortgage customers. Almost 37,000 of those customers subsequently opted to take a second three-month payment break, meaning the majority of customers had enough confidence and certainty to come off their initial three-month break. Payment breaks were put in place for 32,000 SMEs and for 4,000 corporate customers.

The Deputy is aware of the guidance from the European Banking Authority, EBA, in regard to the phasing out of, and the changing of the guidelines on, payment moratoria. I have met and engaged with the banks this week in this regard and in regard to how we can make sure the right level of support is available to those who need it across the coming weeks and months.

I listened to what Deputy Doherty said about other countries. However, he did not mention that, for example, in Germany those breaks are on offer in 21% of banks. Here, in Ireland, it is 100% of the banks, but he did not mention that in the contribution he made. He made reference to Spain, but he did not make reference to the fact that those who are able to access those breaks access them if they see their income fall by more than 40%. What we have done here in Ireland is something that is broad and that has made a difference to so many. If he is going to compare us to other countries, Deputy Doherty should portray the full picture of what has happened in other countries and allow the record of what we have done here in Ireland a fairer comparison.

The Minister is the majority shareholder on behalf of the Irish people in AIB and Permanent TSB, and a significant shareholder in Bank of Ireland. What did he do yesterday? He had tea and coffee with the banks through Zoom and a nice friendly chat, where they came in and told him they are going to do what they always do, which is to deal with individuals on an individual basis. Even if Germany has done this for 21% of its customers, the Minister will have failed to address it for anybody after this month. Under the EBA guidelines, banks in this State could have announced a continuation or an extension of the breaks, which would mean these individuals’ credit rating would not be affected. It would mean they would not be deemed as non-performing loans if they could not pay the full capital or interest. It would mean the banks would not have to hold additional capital when we need banks to be lending to SMEs. There are 32,000 SMEs affected, many of which cannot go back to paying full costs and, therefore, this will have a negative impact on their rates. The Minister had a responsibility and, indeed, a duty to do the right thing. He has failed miserably because there will be no extensions to payment breaks for anybody in this State after they run out later this month.

I have a responsibility and duty in this regard which I have discharged. It is by discharging this duty and responsibility that 89,000 breaks were granted to mortgage holders who needed them in the first place. Since then, we have seen almost 37,000 of those deciding they do not need the payment breaks, and that they are able to honour their loans in full.

What Deputy Doherty has just done is a typical Sinn Féin response. What he has put out here, on the floor of the Dáil, is part of the truth. Is he going to go on with this type of debate? In Germany, for example, the breaks he is referring to began in the middle of June whereas the actions we put in place happened when this pandemic arrived in Ireland. I am aware of the need that is there. I am aware of the anxiety and the stress that so many face at the moment. I and the Central Bank have been very clear that with the funding that is available to banks and what they have already done, the ability is now there to put in place arrangements that will work and will do the right thing by families and by business. If Deputy Doherty is going to compare us with what happens in other countries, will he at least do us the duty of a full comparison?

I have no problem making a full comparison. When the Minister compares us to Italy, Portugal, Spain or Germany, the difference is their finance ministers have made sure that, in those countries, people can continue to avail of payment breaks, depending on their circumstances. Here, where the Minister is unique because he is the majority shareholder in two of the largest banks, he has done nothing.

The Minister has allowed these people to fall off a cliff, in a manner of speaking. The reality is that tomorrow is the deadline to apply for a payment break. Some 37,000 people got them approximately six months ago. These people will have to return to making full payments or their credit ratings will be affected. Their loans will be deemed to be non-performing and the banks will have to carry additional capital. We are not back in normal times by any measure. That is why the European Banking Authority, EBA, guidelines allowed countries such as Italy, Spain, Germany and Portugal to do what they did. The Minister had an opportunity to do the right thing. The problem is that he and Fine Gael have done the wrong thing time and again. As we have seen in the cases of Senator Michael D'Arcy and Brian Hayes, the Minister's party is too close to big finance and the banks.

I am representing my party and I am the Minister for Finance in the Government which has at all times sought to do the right thing by those who are facing such difficulties and those who are experiencing the crisis of Covid-19. Deputy Doherty is at it again. He is referring to Italy but, in the comparison he is making, will he point to the fact that, during the moratorium in Italy, only repayments on the principal were suspended while interest payments still had to be made? He also made a comparison to Spain. As I put to the Deputy earlier, to access the measures implemented in Spain, a person must have had a very significant fall in income. In Ireland, we moved quickly to put in place breaks which were needed and which affected tens of thousands of families and many thousands of businesses. I am well aware of the anxiety, pressure and fear that so many are facing. That is why the employment wage subsidy scheme was continued. That is why the Deputy will have heard the Government and Central Bank, over the weekend and recent days, making clear that funding and flexibility exist to put in place the right arrangements for the families and businesses that need them.

Their credit rating will be hit.

I ask for the co-operation of the Minister and Deputies. We are moving on to an chéad cheist eile.