Pearse Doherty (Donegal, Sinn Fein)
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368. To ask the Minister for Finance the contact he has had with lenders regarding the reactivation of the European Banking Authority guidelines on legislative and non-legislative moratoria on loan repayments applied in view of the Covid-19 crisis; if he has sought an extension of payment breaks for borrowers under these guidelines without the accrual of interest during the payment break period; and if he will make a statement on the matter. [3383/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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On the 2nd April 2020 the European Banking Authority (EBA) published guidelines on legislative and non-legislative moratoria on loan repayments. These guidelines provided regulatory flexibility to banks who offered borrowers a temporary payment break due to COVID-19. These guidelines were originally applicable until 30 June 2020 and their application was subsequently extended by the EBA until 30 September 2020.

On the 21 September 2020 the EBA announced that they would phase out the Guidelines on legislative and non-legislative payment moratoria in line with its previous 30 September deadline. However, the EBA announced on the 2 December 2020 that they would reactivate their Guidelines and they applied until 31 March 2021. At that time the EBA also updated the guidelines so that they only apply to loans which have had payments suspended, postponed or reduced by not more than 9 months in total.

Since the onset of the Pandemic, I and my Department, have had ongoing engagement with the retail banking sector to ensure that borrowers impacted by COVID-19 were receiving adequate support.

I met with the CEO’s of the five main retail banks and the BPFI on 18 March 2020 at the onset of the COVID-19 pandemic to discuss the actions that were taking place to assist the customers who were affected by the pandemic. At this time payment breaks were introduced by the industry under a voluntary programme and their introduction in this way allowed for a rapid response and the provision of immediate relief to impacted borrowers.

Following on from this in May and July 2020, I met with representatives of the retail banks again to discuss the supports that business and mortgage customers were receiving during the pandemic.

On 28 September 2020, I along with the Tánaiste and Minister for Public Expenditure and Reform, met with the retail banks and the Banking and Payments Federation who agreed to provide suitable supports, both short term and longer term, to borrowers who are experiencing difficulties on a case-by-case basis following the conclusion of the general payment moratoria in Ireland.

In relation to the accrual of interest on loans during payment breaks, lenders will continue to incur costs (both in respect of funding and enhanced operational requirements) and that other borrowers will continue to be liable for their interest charges. Payment break measures do not come without cost to the banking sector and these costs will also have to be managed in a way that protects their business and will be as fair as possible to the various stakeholders. From the outset, I have made it clear to banks that it will not be acceptable for them to make excess profits on payment breaks and that it will be a matter for them to demonstrate that such a situation will not arise.

I understand that circa ninety percent of borrowers have now returned to full repayment either under existing or extended terms. In respect of borrowers who are still experiencing repayment difficulty at the end of a COVID-19 payment break, mortgage lenders are expected to work with borrowers in a pro-active and sympathetic manner and with the objective of assisting borrowers to meet their mortgage commitments.