Mr. Ed Sibley:

The Deputy will forgive me for the fact that there is a degree of complexity to the answer. The core point is that the risk weights, the amount of capital a bank needs to hold here relative to its mortgage book, reflects the risk. That is the core principal. Some of the banks operate on the basis of what is called a standardised approach, which involves a defined risk weighting for everyone. Therefore, everyone uses that approach regardless of the jurisdiction they are in. For residential mortgage lending, that is the standardised approach they use.

The larger institutions would typically use their own internal models. That is based on the performance of the book over a period of time. Typically, in most instances in most jurisdictions, those risk rates - through using the internal models - would be lower than the standardised approach. However, because of the history in Ireland with the level of loan losses experienced, the level of non-performing loans that remain in the system and the losses associated with those non-performing loans, there is not that much difference between the standardised and the internal models.

To expand on the Governor's point, we would expect exactly the same as would be expected across the entire eurozone. There has been a big programme of work, which is called a targeted review of internal models, to ensure banks across the eurozone are following similar approaches, similar methodology and similar outcomes in terms of calculating the amount of risk weight relative to the loan book. However, it is absolutely the case that risk weights in Ireland are higher than many, but not all, other jurisdictions.