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Archive for the ‘IMF’ Category

The former CEO of the NTMA and now Government-nominee to the board of AIB, Michael Somers made headlines a fortnight ago when he claimed that increased regulation was leading to international banks to hand back their licenses and exit from Ireland, taking their business and contribution to the economy with them. The comments were interpreted by a cartoonist in one newspaper with a helicopter emblazoned with “Goldman Sachs” taking off from the IFSC building beside Bus Aras bus station, with the Famine memorial in the foreground and some choice words about bankers and their pay, which was also cited by Michael as a reason for deterring recruitment and activity in state-owned banks.

But is there any truth to the claim?

This week in the Dail, the Sinn Fein finance spokesperson Pearse Doherty asked the Minister for Finance Michael Noonan to give detail on the number of banking licenses that had been given back. In terms of wholesale banking operations of the type we would associate solely with the IFSC, the number has declined from 30 in 2010 to 22 today, a decline of 8 or 27%.

Alas, Michael Somers didn’t provide detail on the regulation which IFSC banks found unpalatable, and there might be other reasons for the exodus, but it seems undeniable that there has been a steady decline in wholesale banks since 2010.

The parliamentary question and response are here:

Deputy Pearse Doherty: To ask the Minister for Finance if he will confirm by year for each of end of 2010, end of 2011, end of 2012 and currently, the number of extant banking licenses issued to banks operating in the International Financial Services Centre; and if he will make a statement on the matter.

Minister for Finance, Michael Noonan: The total number of credit institutions registered in Ireland is 437. A full list of authorised credit institutions is available on the Central Bank website at http://registers.centralbank.ie/DownloadsPage.aspx.

It is difficult to clearly demarcate which banks participate in international financial services activity based solely on location in the International Financial Services Centre. The Central Bank has identified the key international financing operations which it considers to be IFSC type banking activities i.e. wholesale institutions carrying out non-retail banking activity. The number of wholesale institutions licensed for non-retail banking activities on 31 December 2010 was 30; on 31 December 2011 there were 26; and on 31 December 2012 there were 24. The current number of wholesale institutions licensed for non-retail banking activities is 22.

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Tomorrow will see the 115th weekly bank bailout protest in Ballyhea, the parish just south of Charleville in county Cork. At 11.30am after mass, they’ll again march the 15 minute route up and down a stretch of the main Cork-Charleville road to signify in a modest way their opposition to the bailout of the Irish banking system at the expense of its citizens. The group has achieved national recognition and has inspired groups in other towns and villages to hold their own weekly bank bailout protest.

What has been happening over the past five years is actually quite simple if you follow the money. Creditors of banks, known as bondholders have seen their loans bonds repaid 100% in the case of senior bondholders, and the money has come from the Government who poured that money in as “recapitalization”, the money came from the State and its citizens and from loans from the Troika and the international bond market. There are still bonds outstanding at Irish banks, but all of the bonds have now been repaid at Anglo and Irish Nationwide save for less than €200m which are at risk after the special liquidation of IBRC in February 2013.  Some bonds remain at Permanent TSB and AIB which are still weak banks. Bank of Ireland is now the healthiest of the Irish banks. But the bulk of the bonds have now been repaid. That money is gone and what we have left are depleted State coffers and huge international debts.

So, this week, the Ballyhea protesters have launched a set of proposals around which they hope to galvanise support. You can read the proposals here and on Thursday this week, the protesters visited Leinster House where they met with several TDs whom they have asked for support – at time of writing Clare Daly is the only TD to have provided a written endorsement but other TDs said they would take the proposals away to consider, some with their Parties. The proposals attempt to deal with the reality that much of the cash has now been handed over by Ireland – we can point to where some of the cash came from, the National Pension Reserve Fund and where some of the loans came from, in February 2013 we created €25bn of sovereign bonds to swap with the infernal Anglo and Irish Nationwide promissory notes. But to a large extent, at this point the money is gone.

The group wants the €28bn of sovereign bonds issued to settle the Anglo and Irish Nationwide promissory notes, cancelled. The counterparty to these bonds at present is not the open market but the ECB, and the group wants these cancelled because they relate to promissory notes which are an abuse of the ECB’s own rules, possibly illegal under Irish law and were created by the Irish state under duress by the ECB who otherwise threatened a withdrawal of liquidity to Irish banks.

The second proposal seeks reimbursement of the cash costs of the bailout – some €35bn. Minister for Finance, Michael Noonan has not dismissed the possibility that the ESM may pay these costs in the €20bn-plus range, and Minister Noonan has taken issue with statements by the Dutch finance minister that the ESM will not be used to refund legacy bank bailout costs,

The protesters are back on the road in Ballyhea tomorrow, but with are now seeking support for their proposals so as to build a position which can be brought to the ECB and our partners in Europe.

What is the gross cost of the bank bailout?

It comprises the famous €64.1bn – comprising €20.7bn to AIB/EBS, €4.7bn to Bank of Ireland, €34.7bn to IBRC and €4bn to, what was, Irish Life and Permanent once you take into account the €1.3bn paid for the assurance business – plus an additional €933.775m shoveled into IBRC in March 2013 plus the €5.6bn state-aid which NAMA paid the banks for the loans it acquired – the “state-aid” was mostly the long term economic value premium that NAMA paid the banks on top of what the loans were actually worth. Because the State didn’t have €71bn to give the banks, it has borrowed some of that money and the loans carries interest; we have also practically depleted the National Pension Reserve Fund which means we no longer earn interest on that money. The jury is still out on NAMA and one senior minister has stated that it might make a loss of up to €15bn though you would need deduct the state-aid in the context of the calculation here, and banks might need further capital to deal with the mortgage crisis.

What is the net cost of the bank bailout?

We have received some money back from the banks. They have paid us approximately €4.5bn in fees in return for providing guarantees though with the withdrawal of the guarantee at the end of March 2013, that income has now dried up. In addition, we have sold part of our stake in Bank of Ireland to a group of North American investors for €1.05bn and we have sold €1bn of so-called contingency convertible notes for €1.01bn at the start of this year. We have also received dividends of €0.5bn in Bank of Ireland. We have received €1.3bn on the sale of the insurance part of Irish Life to Canadian company. We have also received enhanced surpluses of approximately €4bn from the Central Bank of Ireland since Irish banks needed to borrow very large amounts from the Central Bank after the inter-bank market froze in 2008.  So the net is closer to €59-60bn and we still notionally have valuable stakes in AIB, Bank of Ireland and Permanent TSB, though at this point it is really just the Bank of Ireland stake worth €2.5bn including €18bn of preference shares that looks sound.

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“The Black Book was the CB crisis management manual including guidance on subjects such as emergency liquidity assistance, legal requirements and more logistical issues.” Nyberg report on the banking crisis published March 2011

This sounds like something out of the Evil Dead, but it seems that the Central Bank of Ireland has a ”Crisis Management Manual” also known as “The Black Book” which is a “set of processes and procedures to assist it in the management of a financial crisis situation”. It was drafted in 2001 and updated in August 2007. Given that it was in existence before the Night of the Bank Guarantee in September 2008, before the nationalization of Anglo Irish Bank in January 2009 and the creation of NAMA in December 2009, you would think that we had a right to see this Black Book. Let’s not forget that this state has borne the €71bn gross cost of bailing out the banks – that’s the famous €64bn plus €1bn shoveled in, in March 2013 to pay IBRC bonds plus €6bn of state-aid given to the banks by NAMA.

In the Dail this week, the Independent TD for Wicklow and east Carlow, Stephen Donnelly asked Minister for Finance Michael Noonan to provide a copy of the Black Book, and…… yes, you’ve guessed it, it’s confidential. In fact Minister Noonan went further this time and said “The document was shared with the Department of Finance on the understanding it would be treated in strictest confidence given the nature of the matters treated in the document. I do not therefore propose to provide a copy of the document.”

It can’t have been a great read.

The parliamentary question and response are here:

Deputy Stephen Donnelly: To ask the Minister for Finance if he will provide a copy of the Crisis Management Manual, also known as the Black Book, as it existed at the end of 2006 and/or as redrafted during the period August 2007 to September 2008 under the auspices of the Domestic Standing Group, as referenced in the Honohan Report and the Nyberg Report (details supplied); and if he will make a statement on the matter. [21091/13]

Department of Finance, Michael Noonan: The document referred to by the Deputy in his question was drawn up by the Central Bank of Ireland to provide it with a set of processes and procedures to assist it in the management of a financial crisis situation. The question of releasing the document is therefore a matter for the Central Bank of Ireland in the first instance. The document was shared with the Department of Finance on the understanding it would be treated in strictest confidence given the nature of the matters treated in the document. I do not therefore propose to provide a copy of the document.

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General
The reserved judgment in the Paddy McKillen
appeal hearing in London is due any day now
Monday 6th May 2013
Holiday in Ireland and UK
Tuesday 7th May 2013
(CSO) Vehicles licensed for the first time April 2013
(CSO) Mthly Services Index Mar 2013 (Provl) Feb 2013 (Final)
Troika review scheduled to conclude
Agriculture Oireachtas committee – Coillte sale
Wednesday 8th May 2013
(CSO) Crops and Livestock Survey June 2012
Finance Oireachtas committee – Pre-ECOFIN Min Finance
Sean Dunne creditors meeting Connecticut
Thursday 9th May 2013
(CSO) Consumer Price Index April 2013
Friday 10th May 2013
Central Bank provisional banking figures April 2013

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“DBRS sees NAMA’s efficient operating structure, good revenue stream from investment properties and continued solid realization of value from the property portfolio as underpinning NAMA’s profitability in 2013. Further, DBRS sees Irish property values as staying within a narrow band through 2013, which combined with the noteworthy discounts on the property book, should limit further credit losses and support earnings.” Ratings agency DBRS note on NAMA

Canadian ratings agency, DBRS is generally overshadowed by its more successful troika of competitors – Standard and Poor’s, Fitch and Moody’s – though the NTMA seems to disproportionately refer to DBRS. This week, it issued a briefing note on NAMA. It is available here though free registration is required to access it, it’s contains a large amount of well-assembled facts and figures though there is nothing there that should surprise the regular audience on here. You might take some opinions with a pinch of salt, but ratings agency opinions are of more interest than the norm on here, because they tend to be independent.

DBRS pays NAMA some handsome compliments. It says the Agency has assembled a “talented team” with “deep experience” and with “the necessary skills to extract the best possible return from the loans and underlying property assets”. DBRS goes on to say “NAMA has developed a robust and efficient infrastructure that allows NAMA the flexibility to develop individual responses to each debtor that bests maximizes the returns “

DBRS might be overegging NAMA’s progress with agreeing business plans and a sizable number of developers might take issue with the view expressed that “NAMA continues to actively manage the assets and invest in the assets so to optimize the income producing potential and disposal value of the assets” The sale of the Project Aspen portfolio with 60% staple funding and a 20% equity retention for NAMA in return for diluting its security, was not greeted well on here. The recent move by one of NAMA’s most reputable developers, Sean Mulryan’s Ballymore, to sell a large development site in London’s Docklands also prompts questions about NAMA’s mission to profitably enhance assets with the objective of maximizing returns – here you have a 37 acre site being sold off by one of the few companies which has a proven record of developing such large sites, and you have NAMA snaffling the proceeds so that it can pay down funding which costs it 0.3% per annum – full cost of capital has been recently estimated at 1.5%.

DBRS also notes that the short term outlooks for the Irish property markets are “challenging” though unlike Fitch, Moody’s and S&P, there is no prediction for price changes; it says “DBRS considers NAMA’s credit risk profile as elevated given the concentrated exposure to the Irish property markets, which remain challenged owed to the lack of liquidity, high unemployment, strained rental rolls and weak consumer confidence.” However DBRS notes that NAMA acquired the loans at just 43c in the euro so has some cushioning, though I don’t think DBRS has sufficiently accounted for the 27% and 32% declines in commercial and residential property since NAMA’s valuation date of November 2009.

The note is well worth a read, and at the bottom has a useful three year financial summary of NAMA’s operations.

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Scowler

I must admit to never really taking to Matthew Elderfield, the man who currently holds the twin titles, deputy governor of the Central Bank of Ireland and Financial Regulator. He came in here from Bermuda in January 2010 when our banking sector was in the eye of the storm and three years later, the sector is much changed but still in crisis. Known for his perma-scowl, bowingly captured in the old media, Ireland was another expat posting where he was paid a barrowload of money, and now, three years into a five year contract, he is “returning home” to the UK where he is set to take up a directorship – confirmed this week as director of conduct and governance – in Lloyds in October 2013

Whilst here, he oversaw two lightweight stress tests of the banks, before we got serious under the whip-hand of the IMF and ECB and did it properly at the start of 2011 – by “properly” I mean the results were given more credence by the audience of markets and government though at €30m-odd, they were certainly more expensive than what went before. Matthew was close to the helm when the €30bn of promissory notes were created. Retail banking competition has contracted with banks deleveraging and rationing lending, there are some horror stories about tracker mortgage holders being strong-armed onto variable rate mortgages, variable rates are rising when the trajectory at the ECB is flat to declining. There has been no enquiry into swap mis-selling even though there is a steady stream of actions in our courts. The credit union sector has been bailed out and we still have very expensive receivers acting in the Newbridge branch. Nearly two years after NAMA’s tranches 3/4 were acquired with a par value of €19.2m, the due diligence by Matthew has still not been completed.

On the other hand, the word from those close to the Bank, is Matthew has changed the culture which is now more engaged and accountable than it was under the previous string of Government appointees – some might even call Matthew’s predecessors, “lackluster insiders”. It is thanks to Matthew we have the quarterly data on mortgage arrears, so at least we generally know the scale of the problem, even if solutions have remained elusive. And, although it was controversial and a sizable number vehemently disagree with the decision, the view on here is that Matthew showed courage, a sense of probity and a commercial instinct when he acted against Quinn Insurance.

As for his successor, the odds-on favorite is his underling Fiona Muldoon who was confirmed this week to have the poison-chalice responsibility for the mortgage resolution targets – the view on here is that 25,000 sustainable mortgage solutions by the end of June 2013, two months hence, is fanciful; sincerely though, good luck to her.

When Matthew’s resignation was announced by the Governor of the Bank, Patrick Honohan, it was stated that Matthew was waiving a €100,000 bonus which was magnanimous of him. Questioning in the Dail however raises doubt as to whether the bonus was actually awarded. Minister Noonan was asked “the date on which the bonus was awarded; the amount of the bonus awarded; the maximum bonus to which Mr Elderfield was entitled; and if he will outline the objectives met by Mr Elderfield which gave rise to the award of the bonus.” [ENDS] The relevant response from Minister Noonan merely states “Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Central Bank. Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment. “[ENDS] The Central Bank was asked for comment and if it might clarify the position, but there was no response at time of writing.

There are now, also, questions about rules within the Central Bank to stop employees departing for the private sector where their privileged knowledge might be deployed to the benefit of their new employer. Matthew’s new employer, Lloyds still has a huge exposure to Ireland with its legacy Bank of Scotland (Ireland) loans, some of which are now managed on behalf of BoSI by Certus. Matthew does not have a commercial function at Lloyds but as a director, even of conduct and governance, he is in a position to potentially be very helpful indeed to Lloyds, though there is no suggestion here that Matthew would ever use his three years of privileged knowledge to Lloyds benefit. But what is to stop him? Minister Noonan’s response will not fill you with confidence; the Bank might move resigning employees away from duties which might bring it into conflict with a new private sector employer but there seems to be obstacle, like a confidentiality agreement or Standards in Public Office which might hinder a departing employee to spill the beans to a new employer.Worrying.

Information in the above is partly derived from these parliamentary questions from the Sinn Fein and Fianna Fail finance spokespersons:

(1) Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the rationale for providing for a €100,000 termination bonus for the Financial Regulator who was appointed in January 2010 and who has recently tendered his resignation to the Central Bank of Ireland.

 

Deputy Pearse Doherty: To ask the Minister for Finance if he will outline the duties to be performed by the Financial Regulator during his remaining six month’s employment at the Central Bank of Ireland; and if he will provide the expected salary and allowances to be paid to the Financial Regulator during this period.

Minister for Finance, Michael Noonan: I propose to take questions 208 and 210 together.

The terms of the contract agreed by the Central Bank with the Deputy Governor Financial Regulation provided for a performance related payment of €100,000 payable on review of performance at the end of the third year of the contract.

When Mr. Elderfield’s contract was agreed in November 2009 the bonus was part of an agreed remuneration package which involved a 50% paycut from his salary in Bermuda. Mr. Elderfield subsequently took a 15% cut in his Central Bank salary.

Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Bank.

Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment.

The Deputy Governor of Financial Regulation will continue performing the duties as outlined in the contract of employment. However, where a conflict of interest could be perceived in supervisory and other issues he will step away with immediate effect from involvement in these issues. Remuneration for the period is as per the terms in the contract of employment.

(2) Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Question No. 272 on 29 January 2013, the reason it has taken nearly two years for the Financial Regulator to validate the process of the transfer of tranches 3 and 4 to the National Assets Management Agency where the par value of the loans was €19.2 billion and the NAMA acquisition was completed in June 2011..

Minister for Finance, Michael Noonan: While I cannot comment on the work undertaken by the Financial Regulator, as the Deputy will be aware the validation process is complex and the work is essential to ensure that the European Commission guidelines ensuring full transparency in relation to state aid are complied with.

I am advised that the process to have the final tranches validated is in its final phase and will be concluded shortly; at that point my Department will be in a position to apply to the European Commission for its full approval.

(3) Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Questions Nos. 208 and 210 of 23 April 2013, if he will confirm if a bonus had in fact been awarded to Mr Mathew Elderfield; if so, the date on which the bonus was awarded; the amount of the bonus awarded; the maximum bonus to which Mr Elderfield was entitled; and if he will outline the objectives met by Mr Elderfield which gave rise to the award of the bonus.

Minister for Finance, Michael Noonan: I am informed by the Central Bank that the terms of the contract agreed with the Deputy Governor Financial Regulation provided for a performance related payment of €100,000 payable on review of performance at the end of the third year of the contract.

When Mr. Elderfield’s contract was agreed in November 2009, the bonus was part of an agreed remuneration package which involved a 50% cut from his salary in Bermuda. Mr. Elderfield subsequently took a 15% cut in his Central Bank salary.

Mr Elderfield agreed to defer the payment of any possible performance related bonus, which was due in January 2013, as part of his terms and conditions of employment agreed, until the end of his employment with the Central Bank. Mr Elderfield has subsequently advised the Commission of the Central Bank that he has waived his €100,000 bonus entitlement at the end of his contract of employment.

(4) Deputy Michael McGrath: To ask the Minister for Finance his views on whether the rules governing employees who leave the Central Bank to take up employment in financial institutions regulated by the bank are adequate to protect the public interest; and if he will make a statement on the matter. [19695/13]

Minister for Finance, Michael Noonan: I am informed that the Central Bank has relevant policies and procedures in place to deal with this potential matter and the Bank believes that its current policies and procedures are appropriate. Specifically, this potential issue is taken into account when drafting new contracts for certain roles or reassigning staff to other duties if a potential for conflict arises.

The Central Bank Code of Ethics requires that in the event of an employee intending to leave the employment of the Central Bank to take up alternative employment, self-employment or business, there is an obligation to provide early notification to line management when a conflict of interest exists, or perceived to exist, between those duties held in the Central Bank and those to be undertaken with the new employer, self-employment or business. In such circumstances, the Central Bank may assign alternative tasks to the individual while their notice period is being served. The notice period may be lengthened in excess of the contractual or statutory notice period, by mutual agreement, where it is considered to be in the best interests of the Central Bank and the employee.

(5) Deputy Pearse Doherty: To ask the Minister for Finance the constraints that apply to employees of the Central Bank of Ireland in the context of resigning and moving to a private sector organisation where confidential or privileged information acquired at the Central Bank of Ireland may be deployed to the benefit of that private sector organisation.

Minister for Finance, Michael Noonan: I am informed by the Central Bank that it has relevant policies and procedures in place to deal with this potential matter and that its current policies and procedures are appropriate.  Specifically, this potential issue is taken into account when drafting new contracts for certain roles or reassigning staff to other duties if a potential for conflict arises.

The Central Bank Code of Ethics requires that in the event of an employee intending to leave the employment of the Central Bank to take up alternative employment, self-employment or business, they are obliged to provide early notification to line management when a conflict of interest exists, or might be perceived to exist, between those duties held in the Central Bank and those to be undertaken with the new employer, self-employment or business. In such circumstances, the Central Bank may assign alternative tasks to the individual while their notice period is being served. The notice period may be lengthened in excess of the contractual or statutory notice period, by mutual agreement, where it is felt that this is in the best interests of the Central Bank and the employee.

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The regular audience on here will know that there is deep skepticism about the recently announced targets to deal with distressed mortgages. Although the announcement on 13th March 2013 was trumpeted by Minister for Finance Michael Noonan, he has since been eager to pass the buck for monitoring the targets to the Central Bank of Ireland. In the Dail this week, he stated that the person responsible for monitoring the targets and enforcing action was the deputy governor and Financial Regulator, your friend and mine, Matthew Elderfield who is scheduled to join Lloyds Bank in October 2013. And beneath Matthew, the person responsible is Fiona Muldoon, the Paddy-Power-favorite to eventually take over the deputy governor role.

FionaMuldoon

So, at the start of July 2013, we should see how effective an employee Fiona – pictured above – is. If the banks fail to offer “sustainable solutions” to 25,000 mortgage account holders equating to 20% of the 125,000 principal residence and buy to let mortgages that were in arrears at the end of December 2012, then the trumpeted targets will not have been met. The view on here is that this target is fantasy but if it is meaningfully met, then perhaps Fiona is really the woman for the job.

However, we also learned this week that the Central Bank’s main stick – forcing banks to assume nil future cash flow on distressed mortgages, save for the value of the associated property – may be utterly useless. This is a “stick” because if banks have to write off a large part of their loans, they will make big losses and may need new capital. Remember, there are already questions over whether this approach by the Central Bank will conflict with International Financial Standards. Now we find out that banks which don’t like the stick can simply upsticks – no pun intended! – and change their regulator. For example, Ulster Bank could change its regulator from the Bank of Ireland to the Bank of England, and this is not pie-in-the-sky, there were rumours in 2012 that Ulster Bank was considering the change, well before these targets were mooted.

The information above is based on parliamentary questions and responses. Deputy Doherty’s are from this week, the Deputy McGrath question (with emphasis added in bold on here) is from 2012:

Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Question No. 252 of 16 April 2013, if he will confirm the name or names of the principal person or persons at the Central Bank of Ireland responsible for setting and monitoring targets at the banks for dealing with distressed mortgages.

Minister for Finance, Michael Noonan: I am informed by the Central Bank that setting and monitoring targets in this area is the responsibility of the Deputy Governor (Financial Regulation) of the Bank who will delegate operational responsibility to the Director, Credit Institutions & Insurance Supervision and the Divisional Supervisory teams.

Deputy Pearse Doherty: To ask the Minister for Finance further to Parliamentary Questions Nos 64 of 12 July 2012 and 251 of 16 March 2013, the power the Central Bank of Ireland has to compel banks to write down the value of problem loans to the value of underlying security if the bank changes its primary regulator, for example, if Ulster Bank changes its regulator to the Bank of England and the British Financial Services Authority..

Minister for Finance, Michael Noonan: The Central Bank (CBI) has informed me that where a bank’s operations in this country are conducted under a licence granted by a regulator in another country (e.g. the UK in this example), the CBI does not have the prudential powers to set problem loan provisioning rules for that bank

The Central Bank’s Code of Conduct on Mortgage Arrears applies to mortgage lending activities with borrowers in respect of their principal private residence in the State. Compliance with the Code is mandatory on all mortgage lenders regulated by the Central Bank.

Deputy Michael McGrath: To ask the Minister for Finance his views on the impact for customers of suggestions that Ulster Bank is moving its regulatory supervision to the Bank of England; and if he will make a statement on the matter. [34206/12]

Minister for Finance, Michael Noonan: I have been informed by the Central Bank that it has not received any formal application to change the regulatory or legal status of Ulster Bank Ireland Ltd from that of a subsidiary of Royal Bank of Scotland Group. However, there are some informal indications that Ulster Bank Ireland Ltd may change its regulatory status and be subject to regulation by the Bank of England and the UK Financial Services Authority as in the case of its parent, Royal Bank of Scotland.

That option is available for all banking groups in terms of how they operate in jurisdictions under European regulation, whether as subsidiaries or as branches.

The Central Bank has full prudential and conduct of business supervisory control over licenced banking subsidiaries. For banks that would opt to operate as branches, the Central Bank would retain powers over conduct of business regulation and liquidity requirements. Accordingly, the Central Bank would maintain its full consumer protection remit over all banking entities operating in Ireland irrespective of their regulatory configuration

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