Mr. Maurice Crowley:

The Deputy raised a number of points. I would certainly draw a distinction between securitisation special purpose vehicles, SSPVs, and the SPVs that are now being used by those who are purchasing loan books from banks. The SSPVs are set up to take sets of quality mortgage assets - as the Deputy suggested - SME loans, credit card loans or whatever and sell them to a very wide base of investors throughout Europe and across the globe. The emphasis in this regard is very much on quality. I do not know all the ins and outs but I think there are provisions within those securitisation vehicles to ensure that the quality is maintained. If a lot of the loans involved go sour, they are backed out and better loans are put in. I cannot be sure of this but I have some sense of what is involved. As a result, these entities are very different animals from the SPVs we have been discussing. There is a general lack of substance around those SPVs.

The question posed by the Deputy is a difficult one.

The loan contract with the borrower transfers across. In the end, whatever rights that loan contract confers in variation of rates and so forth, also transfer. How the new purchaser plans to apply those to terms and conditions within that contract is up to them. I refute the suggestion that existing banks would look for an increase in variable rates to cover losses on other mortgage loans.