Pearse Doherty (Donegal, Sinn Fein)
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73. To ask the Minister for Finance the input his Department or the Central Bank has had in the ECB's work on supervisory response on the treatment of non-performing split mortgages; and if he will make a statement on the matter. [3790/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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By way background, I can confirm for the Deputy that the Department was actively involved in the Subgroup on Non-Performing Loans (NPLs) of the European Council’s Financial Services Committee (FSC). Arising from the work of this sub-group, an Action Plan was agreed to help reduce the stock of NPLs in European banks and their future emergence. The representation of the Department on the sub-group, and the more recent European Commission Expert Group on NPLs, ensures Ireland’s views were voiced and considered in matters that were important for us. 

On 18th January 2018 the European Commission issued the first progress report on the FSC Action Plan for the reduction of non-performing loans in Europe. In the case of Ireland, the report highlighted the significant progress made with NPLs which were down over 60% (EUR 50 billion) from peak in 2013. The report also highlighted that of the remaining EUR 34 billion at September 2017, approximately 65% are mortgages and approximately 45% of these mortgages have been restructured. The report further comments, however, that many of these mortgages will not meet the test to return to performing status despite regular cash flows.

In relation to split mortgages specifically, officials in the Department have been in dialogue with the regulatory authorities to understand the regulatory assessment of certain restructured mortgages. This includes some, but not all, split mortgages and certain other restructured mortgages, which are considered NPLs under EBA definitions for the remaining life of the mortgage even if such loans are performing to the restructure.

I have also been informed that in a recent letter from the head of the SSM to a member of the European Parliament, the SSM indicated that it has been "approached by several institutions from different euro area countries asking for supervisory guidance on the appropriate use of non-performing mortgage splitting". The SSM has started work on a response to these queries and is currently conducting a full legal and technical review of the topic. The Irish Central Bank is providing input into the SSM's review of the topic but this process has yet to be completed.