Ms Francesca McDonagh:

In the interests of brevity, I wanted to be concise, but I am happy to expand. The Bill conflicts directly with the guidelines the European Central Bank has put in place to encourage banks to reduce their NPEs to get towards European norms. The capital allocated to non-performing exposures is much higher than to performing ones. I said at the beginning that, for example, we require ten times more capital to be associated with a loan in respect of a non-performing buy-to-let mortgage than for a performing private dwelling house, PDH, or owner-occupied mortgage. Having inflated NPEs and fewer options to reduce them would result in trapping capital associated with those NPEs. It is essentially landlocking capital that we need to increase lending into the Irish economy to Irish consumers and businesses, to invest in our systems to improve services, to meet regulatory capital requirements or to provide a return to shareholders, including the Irish taxpayer. That is the only way we can allocate capital. I argue as a banker that competition, while it can represent challenges, is ultimately good for the consumer and the sector, whereas the Bill would disincentivise competition in banking. It would make mortgage lending less attractive and less profitable to new entrants, which would reduce the competition many politicians and stakeholders would like to see within the Irish banking market. If the ultimate objective is to increase consumer protection, the Bill will not achieve it. That is not just my perspective. The committee has heard from the BPFI representing the sector but also from the Central Bank, whose representatives were here. I do not need to quote what they said on the record but the same CPC protections exist independently of who owns the asset. The Bill would increase costs for consumers while affording them no additional protection. In fact, it would reduce the availability of capital in the market. For those reasons, it does not make sense and would be bad for the Irish consumer, the sector and the economy.