Ms Anne Marie McKiernan:

The figure of €500 million is based on a stress-test scenario that was undertaken in 2011. The purpose of the stress test at that stage was to assess what were either central or worse-case scenarios that could occur. There was a stress test carried out in the credit union sector and a stress test carried out in the banking sector. Clearly, stress testing is a regular feature of any regulator's role.

At that time, the stress-test estimates were that there was a possibility of a very severe outcome for the credit union sector and, indeed, for other sectors. That stress-test message allowed us to consider at the Central Bank what pre-emptive actions would be good to offset the worst possible outcome and a number of measures were then undertaken, some of which I referred to in my opening remarks. These included increasing reserve requirements in credit unions and encouraging a better provisioning approach. Many credit unions also undertook appropriately conservative measures to safeguard themselves against worse outcomes, including cutting back on their dividends to reinforce their reserve base.

The fact that amount of €500 million or any other stress-test estimate amount has not been needed is not because the figure was in any way inaccurate. It is because the scenario for which it was developed prompted actions that were taken to stop the worse outcome from being realised. It is a good news story for the sector that combined actions, both by credit unions and by us as regulator, ensured that they are now recovering part of their financial resilience and able to face into dealing with their structural challenges which pre-dated the crisis but which they were not able to deal with at that time because of other, much more urgent, financial challenges.