Oireachtas Joint and Select Committees
Thursday, 11 April 2019
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Matters Relating to the Banking Sector: Allied Irish Banks
Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source
With regard to the issue of interest rates and risk-weighted assets, the report recently published by the Department of Finance was very helpful in highlighting the link between interest rates and the capital requirements in terms of the risk weighting. In respect of the figures for AIB it reports for the first half of 2018, 30% is the total figure quoted while the figure for performing loans is 26% and the figure for NPLs is 73%. As AIB reduces its NPLs, is its risk-weighted asset figure improving? As Dr. Hunt notes, it looks back over time. It is a rolling look-back as such. The picture is improving but how strong is the link between those capital requirements - the risk-weighted asset requirements - and mortgage pricing? If we were moving towards European norms in terms of risk-weighted assets, would there be a clear link with interest rates?
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