Thursday 17 January 2019

Banks lost €500m every month last year

Colm Kelpie

IRISH banks lost €500m every month last year, the International Monetary Fund's representative in Dublin has said.

Peter Breuer told a conference that the losses needed to be reined in to avoid having to pump more emergency money into AIB, Bank of Ireland and Permanent TSB.

The IMF's representative to Ireland also warned that the banks weren't building enough capital to support new lending.

The warning comes as the State prepares for a fresh round of stress tests on the banks early next year.

The assessments are aimed at gauging the banks' financial health and the level of losses and future losses linked to defaulted home loans and property lending. Latest figures show that one in four homeowners is struggling to make their home repayments.

The Central Bank said that more than 26,000 households had made no payments on their mortgages for two years, with close to 100,000 households now three months or more in arrears, according to figures for the first three months of the year.

This is up from 92,000 at the end of 2012.

Mr Breuer told the Budget Perspectives conference, hosted by the Economic and Social Research Institute (ESRI), that if growth stagnated at around 1pc in the coming years, then Ireland's debt levels would rise in tandem, hitting 130pc of the value of the economy by 2018.

He referred to it as a "significant risk" and said "keeping an eye on debt sustainability is key".

Mr Breuer reiterated comments made by the IMF last week in its latest review, which warned the Government not to use the savings from scrapping the punishing annual repayments on the Anglo Irish Bank/Irish Nationwide promissory note to ease up on its austerity programme. He urged the Government to stick with the budget plans.

Alan Ahearne, NUI Galway economics lecturer and former adviser to the late former Finance Minister Brian Lenihan, warned against using the money to be pumped into the Ireland Strategic Investment Fund for so-called shovel-ready projects for the sake of it.

Instead, he suggested "sustainable jobs" could be created by helping struggling small and medium businesses suffering from debt problems.

He also suggested a tax on tracker mortgages.

Irish Independent

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