Written answers

Thursday, 3 December 2009

Department of Finance

Banking Sector Regulation

5:00 am

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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Question 30: To ask the Minister for Finance his views on a recent statement by an economist (details supplied), that banks are not foreclosing on hotel loans which have gone bad; his further views on whether the failure to do so could be compromising the hotel industry and storing up future problems for the National Asset Management Agency; and if he will make a statement on the matter. [44866/09]

Photo of Brian Lenihan JnrBrian Lenihan Jnr (Dublin West, Fianna Fail)
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A considerable effort has been made by a number of different agencies aimed at ensuring that banks do not foreclose as a first alternative. I would point out that where a customer gets into difficulty, the banks are required under the respective Codes of Conduct in relation to SMEs and mortgages arrears to give the customer reasonable time and seek to agree an approach to resolve problems and to provide appropriate advice. Subject to these codes where appropriate any decision on whether to foreclose on a hotel loan is a matter for the relevant financial institution.

The price paid by the National Asset Management Agency for a loan will be based on the valuation of that loan. NAMA will only take over hotel loans insofar as these loans are associated with land and development loans. Where a hotel forms part of the security for a loan, the financial health and viability of that hotel would be taken into account. In the course of its operation it is expected that NAMA will take possession of various properties. It will manage and deal with these properties on a commercial basis and on a case by case basis with the intention of generating the best achievable financial return for the State.

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