Enda Kenny (Mayo, Fine Gael) | Oireachtas source

The Minister, Deputy Noonan, dealt with this in questions just some short time ago. The special liquidator has full responsibility for determining how the assets of IBRC are sold. In arriving at these decisions, it has considered the cases made from both borrowers and professional independent advice on each of the portfolios in the mortgage area. The decision to offer the residential mortgage book for sale in a portfolio was also arrived at, having regard to the scale of the process and the size of the IBRC loan book.

Furthermore, the decision to sell the loans as part of a portfolio is a more efficient method of disposal and the one that is most likely to give best results in terms of the ultimate sales by the special liquidator, having regard to the public interest. Interference by the State in these matters could lead to challenge from other creditors in the bank.

As the Minister set out, the continued applicability of the Central Bank code of conduct on mortgage arrears, CCMA, in respect of the IBRC residential mortgage portfolio depends on the regulatory status of whoever acquires the portfolio at the end of the process. I am advised that, for instance, should the portfolio be sold to NAMA, it will be mindful of the general market norms that apply when determining its strategy for managing the portfolio.

The Minister, Deputy Noonan, has instructed the Department of Finance to examine the issue in consultation with the Central Bank with a view to bringing forward a solution to the problem.

This is a complex legal issue and will require some careful consideration. We will not know the regulatory status of the ultimate acquirer of the portfolio until the sales process has been concluded. The outcome of the sales process will therefore determine what, if anything, needs to be done at that point. For example, in the event that NAMA acquires the loan book, NAMA is likely to apply best practice in this regard.

There were 17,411 residential loans in IBRC at the end of May outstanding to more than 13,000 customers, so it is understandable that many mortgage owners might be interested in buying their loans. The cost and the practicalities involved would make it both difficult and costly to go down that particular road. Taxpayers have already incurred far too high a price from this bank, and no further cost should be imposed upon them. It is important to note that the special liquidators have confirmed that all borrowers are permitted to repay their mortgage at par value and there are no legislative barriers for such borrowers to do so. The decision, as outlined by the Minister, to package such loans for sale by way of portfolios, is not limited only to the residential mortgage book. Similar decisions were taken in the commercial UK books to maximise sales realisations for the special liquidators.

As the process is under way, clearly we will not know who ultimately acquires the loan book until the process is finished. As the Minister has notified the Central Bank about this, it might be appropriate to see what solution, if any, is necessary following the conclusion of the process.

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