Olivia Mitchell (Dublin South, Fine Gael)

Indeed, and this is very relevant. The situation is quite scary. In the case of AIB, one of our main banks, 60% of its total loan book is concentrated in the property sector, either in residential mortgage lending or in construction and property lending, and that figure is 70% for Bank of Ireland. This makes us very exposed to any downturn in the property market, which is the worldwide problem. However, this situation is exacerbated further in the Irish case by the degree of borrower concentration. A very frightening figure I read recently suggests that a mere 40 borrowers are responsible for half of the commercial development loans given by our two main banks. The same figure for residential borrowing is not available but from what we all know about the residential market, the level of borrower concentration there must be even more extreme.

By any stretch of the imagination, one cannot claim the Irish banks have a balanced portfolio — that is the problem. When one adds to that the economic problems — the negative growth we are now experiencing, unemployment and the drop in house prices — we have our own toxic bank debt that the other international banks must look at with a very jaundiced eye. We need to deal with the underlying problem and we need to know how we will do so. For example, what will happen to the young mortgage holders and first-time buyers who borrowed at the top of the market and now face negative equity?

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