Mr. Ed Sibley:

Banks should be pricing according to the risks associated with lending. These include credit risk, which includes, to a degree, interest rate risk, to which I referred earlier, and other costs such as funding and operational costs, for example, the continued operations that are required to deal with mortgage arrears and so on. In terms of what this means in practice, the capital the banks are required to hold in Ireland relative to other eurozone countries is much higher because the probability of default is much higher here and the loss given on default is much higher.

The Central Bank has worked very hard to ensure there are protections in place for borrowers. As a result of that, 120,000 borrowers, the vast majority of whom were in payment difficulties, have had sustainable solutions put in place. Of these, 88% are meeting the terms of those arrangements. This has been effective in terms of bringing down arrears and has ensured there is a minimal amount of repossessions in the system. However, this has not been a free choice.