Catherine Murphy (Kildare North, Social Democrats)
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166. To ask the Minister for Finance if he or banks here are taking direction from the European Central Bank regarding the sale of loan and mortagage portfolios to investment companies; if his attention has been drawn to reports in the media that a bank (details supplied) is forced by law to hide losses due to the fact that it has to comply with accounting standard IAS 39; and if he will make a statement on the matter. [36634/18]

Paschal Donohoe (Dublin Central, Fine Gael)
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As the Deputy will be aware since the onset of the financial crisis, significant progress has been made by the Irish banks in reducing Non-Performing Loans (NPLs) from their peak. A major contributor to this progress has been the number of mortgage restructures the banks have agreed with their customers. There are currently over 137,000 mortgage restructures in place covering both owner occupied and buy-to-let facilities.

Despite this progress, the NPL ratios of the Irish banks remain at an elevated level and are well above the European average of c. 4%. Permanent TSB (PTSB) is a particular outlier in this regard with a ratio of c. 25%, before the recent loan sale (Project Glas) took place. Given this position, the banking regulatory authorities have tasked the management and board of each institution with developing and implementing a strategy with the expectation that they will reduce their NPL ratio towards the European average within a defined time period.

The decisions around the content of these strategies are the responsibility of the Board and management of the banks themselves and the banking regulatory authorities have not mandated any specific actions.

With regards to the second part of your question, a number of Parliamentary Questions have been answered in the past in relation to rules adopted by banks when valuing assets including loans. These rules are determined by the relevant accounting standards and it is the responsibility of the directors of the respective banks to ensure these rules have been properly applied. To provide assurance that this is the case, the proper application of the rules is subject to an annual independent external audit review.? ?

Nothing has been brought to my attention to suggest that these rules have not been correctly applied by the banks. Notwithstanding this, should the Deputy have concerns in this regard, she may wish to refer such concerns to the Irish Auditing and Accounting Supervisory Authority (IAASA), the independent body responsible for the examination and enforcement of certain listed entities' financial reporting.  ?

Finally, the requirement for banks to prepare financial statements is laid out in the Companies Acts. The Companies Acts come under the scope of the Department for Enterprise, Trade and Innovation. The Director of Corporate Enforcement has widespread powers and functions in relation to potential breaches of the Companies Acts.?