Friday 15 December 2017

Banks have suitable contingency plans on debt

Joe Brennan

IRELAND'S banks have sufficient contingency plans in place to refinance a mountain of maturing debt later this year, according to a top regulatory official, as an estimated €77bn of borrowings falls due.

Finance Minister Brian Lenihan told the Dail last week that €29bn alone was due to be refinanced in September, as the original two-year banking guarantee scheme expired.

"We're doing a lot of work with banks to make sure they're managing funding risks," said Jonathan McMahon, assistant director general of the Central Bank's financial supervision. "We're satisfied that their risks are being managed."

He said that if banks could not access bond markets over the coming months, they had been making sure to have "adequate collateral" in place to tap the European Central Bank. Irish Life & Permanent was the last Irish bank to tap the international bond markets -- when it raised €1.25bn.


The country's lenders have packaged billions of euro worth of mortgages over the past few years into European Central Bank (ECB)-eligible securities. The Government-backed bonds that NAMA participants are receiving for their loans can also effectively be cashed in at the ECB.

Mr McMahon said the regulator had been "asking the banks to take a number of steps" to address concerns surrounding maturing debts. He added that he was confident the banks "will pass through" upcoming refinancings "without incident".

But the regulatory official highlighted that Irish banks, which remained among the most reliant in Europe on the volatile wholesale funding markets, faced the challenge of overhauling their funding profiles.

Irish Independent

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