Mr. Matthew Elderfield:

We must ensure a balancing act on mortgage arrears. A great deal of capital has been put into the banks. The average is approximately 15% and it is higher in some cases. The level is a good deal higher than our minimum of 10.5% and a good deal higher than the EU requirements. There is some capacity to absorb levels of loss on the mortgage portfolio over time. However, it is not an unlimited amount. We have to be cautious about debt forgiveness or doing deals that would create moral hazard, and people would be wanting more and more of this. Getting a balanced approach between trying to assess the right solution case by case is very important.

I gather the Government is publishing the ninth or tenth EU-IMF review today and it will have some wording on the stress tests.