Michael McGrath (Cork South Central, Fianna Fail)
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Question 85: To ask the Minister for Finance when the 2012 stress tests of Irish banks will be carried out; the arrangements that will apply to the appointment of consultants to work on the stress tests; and if he will make a statement on the matter. [1791/12]

Michael Noonan (Limerick City, Fine Gael)
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The assessment and application of the stress tests of Irish Banks is not a function of the Department of Finance but the Central Bank has informed me that it is preparing its plans for the 2012 Financial Measures Programme, including the nature, timing and specification of solvency stress tests. The activities proposed in these plans are subject to the review by, and agreement with, the IMF/EU/ECB and thus the details of which cannot be disclosed in advance of signing an updated Memorandum of Understanding with the troika. The appointment of consultants to assist with these proposed plans is on-going in accordance with public procurement rules and again subject to the signing of an updated Memorandum of Understanding with the troika.

Michael McGrath (Cork South Central, Fianna Fail)
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Question 86: To ask the Minister for Finance in regard to the results of the PCAR stress tests for the Irish banks announced in March 2011, if he has any concerns that the emerging data relating to the level of owner occupier mortgage arrears, the state of buy to let residential loans, commercial loans, non-National Asset Management Agency property loans and various forms of personal credit, could approach and possibly exceed the adverse scenario assumptions with the possible consequence of additional recapitalisation being required for the banks; and if he will make a statement on the matter. [1792/12]

Michael Noonan (Limerick City, Fine Gael)
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The assessment and application of the stress tests of Irish Banks is not a function of the Department of Finance but the Central Bank has informed me that the solvency stress test applied by the Central Bank of Ireland in 2011 was used to recapitalise the Irish guaranteed institutions. The stress test scenarios were designed to represent extreme but plausible events, but they were not forecasts. The macroeconomic environment deteriorated in 2011 and as a result, arrears levels and loan loss provisioning has increased. As the realised scenario in 2011 was within the bounds considered for the purposes of recapitalising the banks in 2011, the Central Bank is currently of the view that the banks are adequately capitalised.

The Central Bank is preparing for the 2012 Financial Measures Programme, including the development of an updated solvency stress test. The activities proposed in these plans are subject to the review and agreement by the IMF/EU/ECB and thus the details of which cannot be disclosed in advance of signing an updated Memorandum of Understanding with the troika.