Mr. John McDonnell:

There was considerable discussion around, even prior to that, if you just look at who the ISB are, the ISB are an independent objective standard setter, that's why people apply their rules because they're independent and objective. When the ISB set IAS 39, they would have a very long consultation period and as part of that consultation period, they would have got a lot of comments back from users of the financial statements around what was right or wrong. Sorry, what they believed was appropriate or not appropriate ... sorry, that's the right way to say it ... and they would have taken that into account and then they made their deliberation. And it's important to understand where the ISB are coming from with this. They were concerned at that point in time because a lot of market participants were concerned that people were making what was called "big bath provisions" or as Deputy Levitt in the SEC "cookie jar provisions". There was concern that people were making provisions when times were good and then they were releasing those provisions when times were bad and smoothing their profits to ensure that they had an appropriate trend. That was the concern ... so that was at the forepoint of the ISB's mind. So the ISB's intention on IAS 39, would be that it was pro-cyclical, their intention was that when there was a significant downturn, you would have greater losses than in benign times. That was the intention to meet that obligation. So clearly, when financial institutions and people were moving from old GAAP ... what we called old Irish GAAP (IFRS), there was a lot of debate about what would IAS 39 mean in the context of provisions.

And it would generally mean that provisions would be lower. There was some debate about the appropriateness or not ... the appropriateness or not of that, but it kind of all became a little bit irrelevant because, when the EU adopted IAS 39, it had to be applied. So, once personal views as to whether it was right ... once personal views as to whether you felt it was the most appropriate standard became not of a consequence, it was the standard, it was the rules and, therefore, you needed to apply ... apply those rules. And that's what financial institutions and, indeed, other financial institutions did. They just moved on and they applied the rules and they kept going.