Mr. Stephen Groarke:

I will pick up on the discussion we had at the last meeting. The question arose then as to how AIB was able to represent that its split mortgages were not non-performing. They were classified as performing whereas ours ended up being non-performing. It is true to say that banks have structured their split mortgages in different ways. One of Deputy Pearse Doherty's colleagues in the European Parliament received a detailed response from Ms Danièle Nouy in April. That was a clarification of the interpretation of the regulations and that confirmed the position that Mr. Masding has outlined. Our split mortgages today are classified as non-performing. It is also clear that when we structured our split mortgage in 2012 and 2013, we could not possibly have anticipated how the Single Supervisory Mechanism, SSM, would clarify the regulations a number of years later.

There is a distinction between the economics of the split mortgage for us and the economics of the split mortgage for AIB. Split mortgages make up about one sixth of our forbearance treatments. In AIB, they make up about 6% of its overall forbearance treatments. It is a much more prevalent treatment for us. The key distinction is that the level of the warehouse we offered is much higher than it is in AIB. As we understand it, the size of the warehouse in AIB is typically less than 20%. We have been, as we described, more generous on the level of warehouses we have been willing to offer. We have gone as high as 80%. Almost all of our splits are between 20% and 80%. That is critical to how non-performing loans are judged because there is a 20% threshold within the regulations on how defaulted loans are classified as NPLs. There are distinctions and they are very important. We needed the SSM to clarify the regulations, in the way it did, to us and to the Deputy's colleague in the European Parliament in April to be clear on that.