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

As the Deputy will be aware, the definition of what constitutes an NPL is not determined by me but rather by the relevant accounting standards and regulatory bodies, including the Single Supervisory Mechanism, SSM, and the European Banking Authority.

As the question specifically relates to the treatment of restructured loans, I shall repeat the context I provided in respect of this matter earlier. During the height of the financial crisis, a focus of authorities was on stabilising and reducing mortgage arrears. This led to the introduction of targets and a process then followed that included the provision and availability of split mortgage solutions or part capital and interest solutions that met certain criteria. These measures were accepted by the Central Bank of Ireland as being sustainable for the purposes of these targets.

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

Officials in my Department met with staff of the SSM at the highest level on two separate occasions. We have outlined the background to the restructuring efforts in Ireland and have 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.

See this speech in context