THE head of AIB said he favours holding off on so-called bank "stress tests" to allow time to assess the impact of the Central Bank's targets to deal with distressed mortgages.
AIB chief executive David Duffy made the comments at the announcement of a new €200m European-backed fund to support lending to small- and medium-sized businesses that will be managed by his bank.
Mr Duffy said he was in favour of delaying the next round of so-called stress tests, that will assess the health of Irish lenders, until the impact of the Central Bank's plan to deal with struggling mortgage borrowers has had time to be known.
A decision on when the next probe of the financial strength of Irish banks will take place has yet to be taken.
The International Monetary Fund (IMF) is pushing for an early deadline, probably September, which would mean the results are known before the end of the bailout in December.
However, the European Banking Authority (EBA) is expected to hold Europe-wide stress tests next March.
It would be useful to have facts from the Central Bank targets instead of basing stress-test findings on a model, he said. Under the Central Bank plan, each of the main banks has been given monthly targets of the number of distressed mortgages they should try to restructure. Banks should have addressed half of all struggling mortgage borrowers by the end of the year, under the scheme.
The timing of the next round of stress tests, including a so-called prudential capital assessment review (PCAR), is due to be agreed in June by the Government and the bailout agencies.
Meanwhile, AIB and the European Investment Bank (EIB) have announced a €200m fund for investment in Irish SMEs.
The EIB is a European Union bank, set up to support investment across the union. The not-for-profit lender is providing the €200m fund to AIB to manage and the Irish bank will fully pass on the cheap cost of the money to customers. It means loans will be available at a discounted interest rate of 5.5pc.
The SME initiative was launched by David Duffy and the president of the EIB Werner Hoyer. Jobs Minister Richard Bruton was also at the event.
"Ireland has taken unprecedented steps under the EU/IMF programme. We want to be part of the success story," said Mr Hoyer. "The EIB stood by Ireland during these challenging times," he said.
Over the last five years, the EIB has provided more than €3bn for infrastructure investment and for lending to small businesses in Ireland.