Michael McGrath (Cork South Central, Fianna Fail)
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Question 148: To ask the Minister for Finance the potential implications for financial institutions in this State of the inclusion in the draft European bank capital directive the requirement that all loans be treated as in default when they are in arrears for more than 90 days, particularly the impact on banks' capital requirements and their ability to work with mortgage holders in arrears; and if he will make a statement on the matter. [5529/12]

Michael Noonan (Limerick City, Fine Gael)
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I am informed by the Central Bank that it does not see any material near-term impact on banks' capital levels or on their ability to work with mortgage holders in arrears from the draft Capital Requirements Directive provision on the definition of default (Article 174). In the current Capital Requirements Directive (Directive 2006/48/EC), which Ireland transposed through SI No.661 of 2006, default shall be considered to have occurred with regard to a particular obligor when either

a) the institution considers that the obligor is unlikely to pay its credit obligations to the institution, the parent undertaking or any of its subsidiaries in full, without recourse by the institution to actions such as realising security; or

b) the obligor is past due more than 90 days on any material credit obligation to the institution, the parent undertaking or any of its subsidiaries. I am informed by the Central Bank that its assessment is that the definition of default in the proposed new directive remains broadly the same.

People experiencing difficulties with their mortgage arrears are covered by the Central Bank's Code of Conduct on Mortgage Arrears (the CCMA). The Central Bank also produced a consumer guide to assist consumers in understanding the new process and what they should expect from lenders. The guide is available on the Central Bank's website at http://www.centralbank.ie/regulation/processes/consumer-protection/documents/code of conduct on mortgage arrears 1 january 2011.pdf.