Oireachtas Joint and Select Committees

Tuesday, 26 March 2019

Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach

Central Bank of Ireland: Discussion

Photo of Kieran O'DonnellKieran O'Donnell (Fine Gael) | Oireachtas source

Professor Lane mentioned non-performing loans being sold to funds and said the transfer of credit risk and funding risk to investment funds that buy loans constitutes a national reduction in macrofinancial risk, on account of the fact that these funds are primarily overseas.

In the context of Brexit we are hearing from people dealing with the funds primarily that many of them are 100% geared. They are effectively investment vehicles that borrow heavily in the short term and they are buying products such as mortgages that would be long term in their orientation. Their business model is not based on doing restructuring on home loans over a long period.

In terms of reducing national macro-financial risk, we still probably have up to €25 billion invested in AIB, Bank of Ireland and Permanent TSB. What impact will Brexit have on the ability of the Government in time to divest the investment in the mainstream banks, which would reduce in a far more material way the balance sheet of the State as distinct from the funds?

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