Kieran O'Donnell (Fine Gael) | Oireachtas source

We went on a trip to Germany quite recently where we met officials from the ECB. We did some digging on what they regarded as restructured loans. I put it on the record that they were quite offended in that they felt they were being blamed for the Irish banks being put under pressure to bring their non-performing loan ratio down in a rapid fashion. In fact, they took grave exception to this and were highly offended.

They told us that their definition of a restructured functioning loan was putting a loan in place after the restructure where people could meet the repayments. In the example of a €200,000 mortgage, where the individual can afford €150,000 of that but not the other €50,000, they spoke about junior and senior. The senior was the €150,000. They had no concern about the time period as long as the person could meet the repayments. On the €50,000 element, the junior side, that had to be fully provided by the bank. If a person had a €200,000 loan, and a €100,000 was sustainable, that €100,000 would be senior. It could be repayable over whatever period the individual could afford - it could be 15 or 20 years. The other €100,000 would have to be junior - fully provided and a full write-off. Is that Mr. Masding's understanding of it?

They felt that they were the fall guy or fall lady - perhaps some of my colleagues might disagree - for the banks selling to funds. They said that they are not the bad guys or bad ladies and did not wish to be treated as such. To say that they were offended would be an understatement. Could Mr. Masding deal with their point? It was a very interesting high-level meeting and they have concerns about Permanent TSB, which I expect is nothing new to Mr. Masding in terms of how they view the bank. Mr. O'Sullivan might respond on restructuring and Mr. Masding might respond on the macro side.