Friday 24 November 2017

Recap of banks a one-off -- Elderfield

Emmet Oliver

The recapitalisation of the banks later this year will be a one-off with no "second act", Financial Regulator Matthew Elderfield has said.

The costs of the recap will be "manageable" and spread out over time, Mr Elderfield is due to comment in a speech at a conference today.

The regulator said there were still potential bad loans on the banks' books which made it necessary to have a buffer to absorb these losses.

"There are still significant sources of loan impairment in the banks' books despite the NAMA process," says Mr Elderfield.

The speech is scheduled to be delivered this morning at a conference organised by Financial Services Ireland.

Mr Elderfield says that if the banks themselves underestimate the loan losses he is insisting on certain "add-ons" to make sure their capital levels are adequate.

"This provides an additional source of comfort to use as prudential regulators and should similarly provide additional comfort to investors.

"It is clear that a very rigorous process has been undertaken and that there will be no second act in the process of recapitalising the banking sector,'' he added.

Mr Elderfield is demanding that banks retain an 8pc capital cushion.

"It is clear that while there are significant costs associated with the recapitalisation process, these costs are manageable and will be spread out over time" Mr Elderfield said.

Irish Independent

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