Friday 9 December 2016

Banks will have to set mortgage and business loan target

Fionnan Sheahan and Donal O'Donovan

Published 22/12/2012 | 05:00

AIB and Bank of Ireland will be forced to set specific targets for dealing with distressed mortgages and lending to businesses and homebuyers in a new government deal.

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The Coalition will also talk with Permanent TSB management about its plans now that its future is no longer in doubt.

The banks are due to exit the state bank guarantee next year, and the Government wants to know their plans for the economy.

Taoiseach Enda Kenny is revamping a cabinet committee to hold the banks to account.

As well as Tanaiste Eamon Gilmore, Finance Minister Michael Noonan and Public Spending Minister Brendan Howlin, he is bringing in Jobs Minister Richard Bruton, Social Protection Minister Joan Burton and Justice Minister Alan Shatter to scrutinise the banks.

The Government wants specific targets on:

• Lending of new money to businesses – not just rollover finance.

• Approval of mortgages for homebuyers.

• The number of mortgage arrears cases being dealt with.

Some of the commitments agreed will end up in a Memorandum of Understanding with the EU-IMF bailout team. Mr Kenny said he expected to have a new deal done with the banks by March.

Breakdown

"That will include amending of the guarantee in order to reduce the funding costs of the banks and, more specifically, commitments by the banks on lending and dealing with mortgage arrears," he said.

The pillar banks have committed to lending €4bn each, but the Government wants to see a more detailed breakdown.

Meanwhile, the chairman of IBRC, the former Anglo Irish Bank, has accused Transport Minister Leo Varadkar of "gratuitously insulting" executives at the bank by questioning high pay at the state-owned institution. The comments were contained in an email sent by Alan Dukes to Mr Varadkar on November 12.

Mr Varadkar was contacted by Mr Dukes after he was quoted saying that "IBRC and state-controlled banks must respond swiftly to the growing demand for action on pay and pensions".

In his email, Mr Dukes also objected to the minister comparing the bank with a "debt-collection agency".

Mr Dukes said that objecting to the pay of current management at IBRC was like "blaming the team in the intensive care unit for the heart attack that brought the patient there".

The email was sent after the minister had called for action on high pay at nationalised banks, including IBRC.

The minister made his original comments after it emerged that six executives at IBRC were on more then €500,000 a year.

That is above the supposed cap imposed by the Government on pay in state-owned financial institutions.

Irish Independent

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