Mr. Jeremy Masding:

I will do my best. Good afternoon, Deputy.

First, I wish to reiterate the difference between debt write-off and debt forgiveness. Debt write-off is what I would define as traditional banking. One lends money. If a customer finds himself or herself in payment difficulties one does all one can to try to help that customer. Sometimes that means one is unable to find a treatment or it is in a customer's best interest that he or she returns the collateral. If, when one has got that collateral the value of that collateral is less than the loan that is outstanding, one has a shortfall. Then a bank has a choice as to whether it chases that shortfall or writes it off. In the case that Senator Paddy Burke talked about, the large buy-to-let and a voluntary surrender campaign, we determined beforehand that what we would do would be to write off the shortfall. That is what is meant by debt write-off.

Debt forgiveness is where one creates a situation where, essentially, the bank must choose between two customers about how it uses its capital. That is not for the bank to do. On the one hand, one has a customer, as I described here as Customer A, who continues to make his or her repayments. On the other hand, one has Customer B who has been unable to and, essentially, we reduce the mortgage to him or her on a unilateral basis. That has a moral hazard, I think, for two reasons. First, if the customers live next door to each other, one creates the moral hazard around the relationship between those two people because one of them is saying, "Okay, well I work really hard to pay the mortgage and yet you are in a situation where the bank has written you a cheque." That creates a moral hazard because it creates a knock-on effect.

Second, it creates a moral hazard for the banking industry because if the bank does that for one particular customer one then has to ask oneself the question of why would one not use capital to do that for all customers. Therefore, that takes one to the final place which is as follows. The responsibility of the management team is to use the capital that was given to us - the €4 billion by the Irish State - in a most judicious fashion. I could not countenance debt forgiveness, moral hazard and the use of that capital as something that Permanent TSB would do. That is my best effort to answer the question.