Paschal Donohoe (Dublin Central, Fine Gael) | Oireachtas source

I also want to begin my answer by providing some context to this question. During the height of the financial crisis, a key focus of the authorities was on stabilising and ultimately reducing mortgage arrears through the implementation of sustainable mortgage solutions that were agreed with borrowers. This led to the Central Bank of Ireland introducing public mortgage arrears resolution targets for the banks in the first half of 2013. As the process was rolled out, a split mortgage solution and a part capital and interest solution that met certain criteria were both accepted by the Central Bank as being sustainable for the purposes of these targets.

Since the establishment of the SSM at the end of 2014, the focus has shifted from reducing mortgage arrears levels to reducing non-performing loans, NPLs. This shift in focus has been accompanied by a new strict Europe-wide definition of what constitutes an NPL by the European Banking Authority, which means that certain restructures are deemed to be NPLs even if customers are meeting the revised payment schedules.

To answer the Deputy's question, officials in my Department have met with staff of the SSM at the highest level on two different occasions since the end of 2016. In the course of their discussions, they outlined the background and history to the restructuring effort in Ireland and questioned the logic of now classifying some types of restructured loans, including certain split mortgages, as NPLs indefinitely. While my Department has been informed that the SSM is looking into the regulatory treatment of split mortgages across a number of European member states, I have no evidence at this point that this categorisation is going to change.

Aside from direct interaction with the SSM, my officials have also been actively involved in discussions on NPLs through the European Council’s Financial Services Committee sub-group on NPLs and the more recent European Commission expert group on NPLs. While this has ensured that Ireland’s views are voiced and considered on the matter, ultimately the final arbiter on the resolution of NPLs for Irish banks is the SSM.

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