Brian Hayes (Dublin South West, Fine Gael)
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I thank the Senator for raising what is a very important issue. I am aware that the liquidator and colleagues from the Department of Finance appeared before the Joint Committee on Finance, Public Expenditure and Reform today. It was a useful exercise. I saw some of the engagement. I am aware that the Senator asked one of the officials from the Department of Finance about the question of legislation. I will repeat what the Minister for Finance, Deputy Michael Noonan, said in the House last week, which was repeated to the Senator today by an official from the Department of Finance: that if successful bidders row back from the voluntary commitment obtained by the liquidator, the Minister, Deputy Noonan, will act quickly and decisively for the purposes of enshrining rights for people who find themselves in this situation. I repeat that in the House this evening as the Minister repeated it last week. As Ms Nolan told the Senator today, that is the firm position of the Government and we do not intend to change our position on that.

In relation to the proposals that mortgage holders be given first right of refusal to purchase their loans, it is worth pointing out that such an opportunity exists at par in the case of the liquidation in IBRC. I think that is the correct course of action in the case of IBRC. The special liquidator has written to each individual mortgage holder in this regard. I understand from the appearance of the special liquidator before the Oireachtas committee today that approximately 400 IBRC mortgage holders have repurchased their loans to date.

There is no legal impediment to this course of action by the special liquidator, and the terms and condition of many mortgages, including non-IBRC mortgages, allow for redemption at par value. The terms and conditions of the redemption would not be affected by the sale of any loan book. There has been some discussion in the Oireachtas and the media in recent weeks about the suggestion that IBRC mortgage holders who have the financial capacity to do so would be given the exclusive opportunity to buy their mortgage loans at a discount. There has also been the incorrect suggestion that this opportunity was offered to larger corporate borrowers in IBRC and that individual borrowers secured debt write-downs in certain circumstances. I take this opportunity to state for the Senator and other members of the House that I have been informed by the special liquidator that no IBRC borrower is being provided with an exclusive opportunity to buy back its loans at a discount. To direct the special liquidator to give this opportunity to any borrower or group of borrowers could affect the value of assets in the bank and could leave the Irish taxpayer open to legal challenge, future costs and financial risks. That issue was highlighted today by the special liquidator in the evidence he gave to the committee, part of which I saw, where he said that the firm independent advice open to him and his colleague in terms of maximising the assets for the purpose of the taxpayer was to go down the route as he had suggested. That was the firm advice given to him by way of his independent powers and the role and function given to him by both Houses of the Oireachtas through legislation passed last year.

Again, in the case of IBRC, the obligation on the special liquidator is to ensure that maximum value is extracted from the loan sales process for the benefit of all creditors of IBRC, including the State. The sales process plan and the timeline for the sale of the residential mortgage portfolio has been developed following professional advice and in light of requirements for a robust and credible sales process in that context. The special liquidators have obtained this independent advice from PricewaterhouseCoopers, PWC, in respect of the residential mortgage portfolio. The special liquidators have decided that the residential mortgage would be subdivided into four tranches with a view to maximising market interest and return within the timelines set out in the ministerial instructions. Obviously, in the case of future loan sales by other banks operating in Ireland, it would be a commercial and operational matter for the board and management of the institution to decide on the sales process. As part of this consideration, issues such as individual mortgage sales and discounts would be considered.

Turning to the code, as recently explained, the application of the CCMA to unregulated entities is something the Department of Finance is investigating in conjunction with the Central Bank and the Attorney General's Office. This matter is legally complex and it could affect contracts already entered into. It needs to be carefully considered. I remind the House that it makes commercial sense for buyers to adhere to the CCMA, as evidenced by previous sales in December 2013. Lloyds banking group sold its Irish residential portfolio of about 2,000 mortgages to Apollo Global Management. Apollo Global Management met the Central Bank and the Department and indicated clearly that it intended to voluntarily adopt the CCMA in managing the acquired loans. Apollo Global Management believes following the CCMA is in the best interests of both parties, and it forms part of its core strategy. I was delighted hear last night that the special liquidators had announced that an agreement had been reached with the phase two bidders for the IBRC mortgage book. The agreement provides that, if successful, in acquiring the portfolio the phase two bidders will ensure that the relevant acquired mortgage loans are served in accordance with the terms of the Central Bank's code of conduct on mortgage arrears.

The special liquidators were aware of the anxieties of mortgage holders, as we all are, and had noted the concerns expressed in recent weeks by the Minister for Finance and other Members of the Oireachtas. I welcome this positive announcement and remind the House that the Government has always been clear about ensuring that mortgage holders retain the protection of the CCMA. The Government's firm objective is to ensure that mortgage holders in Ireland are afforded the protection of the CCMA. As the Government has previously stated, if it becomes evident that the voluntary application of the code in the case of IBRC and other non-regulated entities is not delivering the requisite protection for mortgage holders in arrears, it will bring forward the required legislation. Work on draft legislation is already under way.

Brian Hayes (Dublin South West, Fine Gael)
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On the first issue, the Minister for Finance gave firm commitments last week which, unfortunately, some people deliberately chose to ignore. Those firm commitments were highlighted again by Ms Nolan at the joint committee today on behalf of the Department of Finance. I think it is important that we do not talk ourselves into an emergency.

Brian Hayes (Dublin South West, Fine Gael)
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I am answering the Senator's question. I seek the same protection I gave the Senator. The Senator asked two questions, and I will reply to them, if I may. It is important that we do not talk ourselves into an emergency for whatever reasons people might choose to do this for their own ends. In regard to the question referred to in my opening remarks, my understanding is that the position has been set out by the liquidator that an offering has been made in circumstances of on-par mortgages. I understand there are four special tranches within the loan book - performing, non-performing and two other categories that I cannot recall - so that provision has already been made. Again, that has been in the public domain for quite some time and there is nothing particularly new in it. The objective for the State - as the Senator well knows, because she supported Bill, as I did, when it came through both Houses - was to make sure that in so far as these are assets, the State maximises the return. That is the only ambition of the Minister for Finance, Deputy Noonan. Second, in circumstances where people's homes are on the line, as is the case for this particular mortgage book, the objective is to make sure that we afford the same protections that apply to other mortgage holders through the CCMA.

I greatly welcome that, as the special liquidator told the Senator today in the committee, after two weeks of intensive negotiation, two potential bidders for the next tranches of the loan book have confirmed they will sign up to that. Were that sale to proceed - this is without prejudice until such a time as a sale does proceed - and were any difficulty to arise, the Minister stated last week, Ms Nolan stated today and I now am telling the Senator that the Government will proceed with legislation to ensure those people have the protection both of the code and, second, of the case law in which the High Court has ruled in circumstances where financial institutions have been attempting to move people out of their homes. The case law from the High Court has been clear in respect of obtaining protection for people in a circumstance in which they have been engaging with the bank and have been attempting to work out a solution that is fair and equitable for the purpose of the institution and their own purpose. This is case law, these are precedents and this is precisely what has happened in the Irish High Court by way of all these matters that have come to the attention of the courts. This cannot be set aside either and, consequently, by way of the case law and the voluntary code, the Government hopes the protection will be given to these people because it does not want them to be adversely affected by the sale of the loan book. While everyone accepts the State must of course maximise its take, because there are significant assets left over by way of the liquidation of the IBRC process, it must be done in a way that is fair for all. The approach the Government has taken in this regard is correct and if further action is required, further action will be taken.