Ms Mary Burke:

When I came to banking supervision, we did ... we had licensing and supervision standards and requirements. They were described as a guide. I knew they were unenforceable under the administrative sanctions procedure. When I came to the department, in terms of the banks this committee is looking at, any of them that breached those limits were already in breach of the limits at that point. In the case of one institution, it had exceeded the limits for almost a decade. In inquiring into the history to those limits, I understood that they had been, in effect, disapplied, in the sense of the particular sectors that the Central Bank had set out. If you look back ... I mean I obviously can't give you all of the details on this but there is a Central Bank board paper from 2003 that acknowledges that in the case of a particular institution, and, more generally, mortgage lending institutions, that the Central Bank had accepted the argument that there was diversification within sectors. That was ... I think that's an April '03 paper, which predates the establishment of the regulator, so it was very much a Central Bank position.

So, as I understood it, the Central Bank and the regulator, subsequently, was accepting the argument that there were ... was diversification within sectors. So if you take property, there's a difference between, I don't know, an office block in London and a semi-d in Midleton, to pick somewhere, so, you know, those ... that diversification was there. The sectors themselves were not prescribed in the licensing standards. We didn't say what we counted as a sector. What was used was ESCB, which ... sorry, European System of Central Banks statistical return, and various categories were the sectors that were used. Interestingly, personal lending, which would have included lending for residential mortgages, so if I bought a house, even to let as opposed to rent, or let as opposed to live in, that lending was excluded; that wasn't considered in looking at the sectoral limits.