Professor Philip Lane:

There are different layers in that regard. In most cases there is a residual element because you want the bank to remain interested in those loans.

However, if a lot of the risk is transferred to the bond investors, the bank can then release funding and look for new opportunities.

There was a certain amount of issuance of mortgage-backed securities by the Irish banks, but I do not think it was a massive part of what was going on. It was more the case that the global banks - the massive international banks - were moving away from direct lending to buying bonds. Sometimes the bonds were backed by US securities but, quite often, all they would need was a good rating. Irish banks were pretty highly rated so they could buy A-rated bonds, and they might have bought a B-rated bond at more risk. Essentially, the global banks were moving from making direct loans to being bond investors.