Central Bank to meet banks to deal with mortgage arrears
Central Bank to meet banks to deal with mortgage arrears
The Central bank is to meet the banks and credit unions next week to deal with mortgage arrears and problem loans. The Central bank is planning to discuss some “burden sharing” of problem loans between secured and unsecured lenders. Fiona Muldoon of the Central Bank has called the meetings for next Tuesday and Thursday. She made headlines recently when she compared the banks to teenagers.
Teenagers are very difficult to deal with so it will be interesting to see how she gets on. Not only does she have to agree with them, she also has to ensure that whatever is agreed is implemented. Part of the aim of the meeting is to agree “key performance indicators” with the banks on dealing with their mortgage arrears. These indicators will show the Central Bank if the banks are tackling the mortgage arrears problem or not. It remained to be seen if the Central Bank or the Financial Regulator has finally grown teeth. More importantly, will they use them if the banks don’t tackle the mortgage arrears problem.
This is on the same day that the Minister for Finance has confirmed that the bank guarantee scheme will end on the 28th March. The scheme guarantees €73 billion of deposits and bonds in the Irish Banks. The state will lose income which they receive from each bank covered by the scheme but the banks will save money which will help them return to profit. Profitable banks are good for the economy.
With the new insolvency regime coming in to force and a concerted effort from Government, the Central Bank, the Banks and the Financial Regulator, the mortgage arrears problem could be solved. But turkeys don’t vote for Christmas. If the banks don’t finally deal with the problem, the other parties need to use their teeth.