Ms Mairead McGuinness:

I thank the Deputy for the question. The strategy will be unveiled next week. It is a communication. I will explain why we are producing it this year. The Deputy rightly said there were problems with NPLs in the past in Ireland. There were also problems in other member states. Currently, because of the supports coming from member states, the policy of the European Central Bank, and various moratoria, we do not have a problem now. We do not want to have a problem. There are two aspects to this. First, borrowers and lenders should identify at this stage individuals or sectors in respect of which problems might arise and there might be an agreement on restructuring. However, there is a concern that as this crisis unfolds into next year, some sectors and enterprises will not be able to recover and, therefore, may not be able to repay loans.

The dilemma, which I referenced in my hearing, is that if we leave non-performing loans on-balance sheet in the banks, they then are impaired in terms of being able to lend to the real economy. The objective is to have the groundwork prepared if this occurs, and we do not know to what extent that it might. In the past, member states dealt with this in different ways, one way being as an asset management company, a securitisation where non-performing loans are moved off-balance sheet, purchased by risk-takers, and on which is put various names. That will frees up the balance sheets of banks.

It is hugely important that the protection of borrowers is foremost in our minds and we know of experiences in the past. Indeed, I was, and probably still am, an elected representative in that I would have dealt this year with individual constituents who had loans that were bought by so-called vulture funds but they could not make contact with them. I am well aware of what happened in the past. That is why in our work here with the Directorate-General, DG, we have been stressing, as it has in return, the importance of protecting borrowers who might find themselves in a position where they are unable to repay loans. It is a difficult balancing act. That is why I initially referenced the importance of now. I mean those who feel they will have a problem with not being able to meet their commitments and banks which see this problem to deal at the individual level first. In the strategy, the details of which will be unveiled next week, we will look at how we set forward a framework that member states can choose from to meet these challenges.