32. Deputy Pearse Doherty asked the Minister for Finance if he has discussed with the Central Bank the actions of a bank’s (details supplied) restructuring group; his plans to do so; and if he will make a statement on the matter. (Question 50886/17 asked on 30 Nov 2017 - Banking Sector Regulation)

Deputy Michael McGrath: This issue relates to Ulster Bank’s Global Restructuring Group, GRG, in Ireland. Between 2008 and 2013 over 2,100 SME customers were put into GRG, with loans of between €1 million and €25 million and a total portfolio value in the region of €14 billion, I think, but I will have to double check that figure. The issue is the role of the Central Bank in dealing with the complaints submitted to Ulster Bank about its GRG process in Ireland.
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141. Deputy Pearse Doherty asked the Minister for Finance his views on the fact that the section 110 tax status availed of by qualifying companies operating as non-bank loan originators in the State could be breaking state aid rules in view of the fact that new banks or lenders which could set up non-retail lending operations here and do not meet the current qualifying criteria for section 110 status would not be afforded the same tax neutral treatment. (Question 48849/17 asked on 21 Nov 2017 - Banking Sector Regulation)

Minister for Finance (Deputy Paschal Donohoe): Loan originations involve a company fronting for a foreign bank and either lending directly to larger more sophisticated borrowers, or immediately issuing newly made loans to smaller borrowers from the foreign bank. Provided the foreign bank is established in one of the countries with which we have signed a double tax agreement, then no Irish tax would have arisen on its interest income had it lent directly to the Irish borrowers.  
Section 110 of ...

41. Deputy Pearse Doherty asked the Minister for Finance if he will instruct the State backed banks including NAMA not to sell loan books to vulture funds; and if he will make a statement on the matter. (Question 10017/17 asked on 28 Feb 2017 - State Banking Sector Regulation)

Deputy Pearse Doherty: This is a straightforward question on the sale of loan portfolios by banks and the National Asset Management Agency, NAMA, to vulture funds. On my question on Project Eagle which was overruled, for the record, the Department flagged the question for disqualification before the Ceann Comhairle ruled on it.
This question asks the Minister to instruct banks and NAMA not to sell loan books to vulture funds, which are unregulated entities. In addition, none of the intermediat...

121. Deputy Pearse Doherty asked the Minister for Finance the legal and regulatory measures that have been put into place since the banking crash to ensure that the culture of reckless behaviour that contributed to that crash has been changed; and if he will make a statement on the matter. (Question 7578/17 asked on 15 Feb 2017 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 121 and 122 together.
A comprehensive overhaul of the legal and regulatory framework in the financial sector has been pursued at both domestic and at an EU level since the financial crisis. A whole raft of new European regulations have strengthened controls over the banking system and have resulted in an overhaul of regulation, supervision and resolution regimes. 
The Capital Requirements Directive and Regulation whi...

122. Deputy Pearse Doherty asked the Minister for Finance his views on whether bankers are more accountable for their actions since the banking crash; if so, the basis on which he is of this view; and if he will make a statement on the matter. (Question 7579/17 asked on 15 Feb 2017 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 121 and 122 together.
A comprehensive overhaul of the legal and regulatory framework in the financial sector has been pursued at both domestic and at an EU level since the financial crisis. A whole raft of new European regulations have strengthened controls over the banking system and have resulted in an overhaul of regulation, supervision and resolution regimes. 
The Capital Requirements Directive and Regulation whi...

123. Deputy Pearse Doherty asked the Minister for Finance his views on the possible re-emergence of a bonus based pay culture in the banking system which could increase the probability of reckless behaviour in future; and if he will make a statement on the matter. (Question 7580/17 asked on 15 Feb 2017 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): The excesses seen in the banking system prior to 2008 has resulted in significant changes to the regulatory framework facing the industry. This included a number of changes to the framework that applies to bonus payments (including salaries and discretionary pension benefits) to staff of relevant institutions. The aim of these changes is to prevent a re-emergence of the issues we have seen in the past of short-term targets being the focus of instit...

76. Deputy Pearse Doherty asked the Minister for Finance if he will legislate to ensure that Irish collective asset-management vehicles are used for their purpose of investment by funds rather than as a tool for investment by a person; and if he will make a statement on the matter. (Question 29378/16 asked on 11 Oct 2016 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): Irish Collective Asset-management Vehicles (“ICAVs”) are corporate entities which may only operate as regulated collective investment schemes (“funds”); either Undertakings for Collective Investment in Transferable Securities (“UCITS”) or as Alternative Investment Funds (“AIFs”).  
The ICAV is one of a range of legal structures available only to managers of regulated collective investment schemes including: Investment Companies established in accorda...

141. Deputy Pearse Doherty asked the Minister for Finance the policy of the State-backed banks in applying discounts to foreign earnings when assessing a mortgage application; and if he will make a statement on the matter. (Question 23962/16 asked on 21 Jul 2016 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): Individual credit policy and lending criteria are in the first instance a matter for the boards and management of each of the individual institutions. 
I am advised by AIB that the bank applies a 20% stress factor on the currency exchange rate to mitigate against currency risk as part of the banks’ mortgage assessment process. The gross income as converted using the 20% stress factor is then applied in the assessment of the mortgage application. Fu...

142. Deputy Pearse Doherty asked the Minister for Finance his views on the Central Bank or his department placing a cap on the discount applied to foreign earnings by banks to encourage returning emigrants; and if he will make a statement on the matter. (Question 23963/16 asked on 21 Jul 2016 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): Under Section 149 of the Consumer Credit Act, 1995 (as amended), the (‘Act’) a credit institution must submit a notification to the Central Bank for approval if they wish to introduce any new customer charge or increase any existing customer charge, for certain services. The provision of foreign exchange facilities, as the Deputy is referring specifically to, is covered by this Act. 
The proposed charges are assessed by the Central Bank in accordanc...

153. Deputy Pearse Doherty asked the Minister for Finance how the loan-to-income and loan-to-value rules under the Central Bank’s macro-prudential lending rules interact with each other; if there is a formula in place that limits the leeway for exceptions that can be used under one rule at the expense of the other; and if he will make a statement on the matter. (Question 19784/16 asked on 05 Jul 2016 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): The Central Bank of Ireland has advised me that there is no restriction on the interaction between the loan to value (LTV) and the loan to income (LTI) residential mortgage lending macro prudential rules. For principal dwelling home mortgage lending, up to 15% of new lending is allowed above the LTV thresholds and up to 20% of new lending is allowed above the LTI threshold. The Central Bank does not prescribe how the lending above the LTV and LTI l...

104. Deputy Pearse Doherty asked the Minister for Finance the provisions in place to prevent reckless lending within the economy and the penalties in place for lenders proved to have lent recklessly; and if he will make a statement on the matter. (Question 17414/16 asked on 22 Jun 2016 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): There are now a number of measures in place to protect consumer borrowers. Key among these is the Consumer Protection Code 2012 (‘the Code’). The Code, which is a statutory code issued inter alia under Section 117 of the Central Bank Act 1989, sets out many important protections for borrowers in relation to the sale of products (including mortgages), by imposing ‘Knowing the Consumer and Suitability’ requirements on lenders. Chapter 5 of the Code ...

61. Deputy Pearse Doherty asked the Minister for Finance the action he is taking in response to the recent report from Financial Stability Board in Switzerland which described how improved monitoring of shadow banking here will require increased regulatory oversight and co-ordination across jurisdictions; and if he will make a statement on the matter. (Question 40990/15 asked on 19 Nov 2015 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I take it that the Deputy is referring to the Financial Stability Board’s (FSB) Global Shadow Banking Monitoring Report which was published on 12 November, 2015. This report presents the results of the fifth annual monitoring exercise using data as of end 2014 for 26 jurisdictions - including Ireland for the first time - as a specific, detailed case study.  I welcome the involvement of the Central Bank in this exercise and in their engagement with th...

335. Deputy Pearse Doherty asked the Minister for Finance to report on his discussions with Allied Irish Banks on the macroprudential rules introduced by the Central Bank; and if he will make a statement on the matter. (Question 38336/15 asked on 03 Nov 2015 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): As the Deputy is aware, I met AIB and the other main Irish banks last September.  The primary purpose of these meetings was in relation to mortgage rates, but some other banking-related issues, including the Central Bank macroprudential measures for residential mortgage lending, were also raised.  In that regard, AIB provided me with an update on the roll out by it of the new macro prudential rules.  As the new rules only came into effect in February...

58. Deputy Pearse Doherty asked the Minister for Finance his views on the assessment in a recent Central Bank of Ireland report that Irish rates for lending to businesses have diverged from the Euro area average over the past year, as rates fell in many countries; that business lending is now 1.24% points above the average; his plans to tackle this divergence; and if he will make a statement on the matter. (Question 35617/15 asked on 13 Oct 2015 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): The Deputy will be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time. These are taken by the board and management of the relevant institution. This includes decisions in relation to product interest rates as determined by the banks from time to...

168. Deputy Pearse Doherty asked the Minister for Finance the safeguards in place to prevent loan books at Irish banks that are sold being bought by those who may have, through previous work, knowledge of the loan books, or a conflict of interest; and if he will make a statement on the matter. (Question 17753/15 asked on 06 May 2015 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): It is the responsibility of the Directors of banks operating in Ireland to ensure that they have governance and control arrangements in place that comply with, inter alia, the Central Bank of Ireland’s Corporate Governance Code and the European Banking Authority’s Governance Guidelines (GL44).  These governance and control arrangements are expected to include strong controls in their front-line businesses, in their risk management and compliance func...

135. Deputy Pearse Doherty asked the Minister for Finance if he will stall the sale of any more loan books at Permanent TSB, until such time as legislation is enacted to regulate all mortgage book owners. (Question 16761/15 asked on 28 Apr 2015 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I have been informed that Permanent TSB has no current plans to sell any Irish residential mortgage loan books.  I have also been informed that they have commenced a sale process for their remaining Irish Commercial Real Estate loan book and are likely to sell their UK mortgage loans in tranches in 2015 and 2016. Both the Irish Commercial Real Estate and the UK loan book sales are commitments of the Restructuring Plan approved by the European Commis...

64. Deputy Pearse Doherty asked the Minister for Finance the systems he has put in place to ensure that the structures of the relationship framework which determines the relationship between the bank and the executive are being observed by State backed banks and that the governance of the bank is fit-for-purpose. (Question 40724/14 asked on 23 Oct 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): As the Deputy will be aware the Relationship Frameworks have been in place with the banks since March 2012. The Frameworks govern the relationship between the individual banks and the State and compliance with these agreements and each bank’s various other commitments are monitored closely on both sides.
Officials from my Department meet with the senior management team in each of the banks regularly to be updated on a range of issues while these off...

65. Deputy Pearse Doherty asked the Minister for Finance the possible implications for the State if a State backed bank is found to have committed fraud; and if he will make a statement on the matter. (Question 40725/14 asked on 23 Oct 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 65 and 66 together.
The Deputy will be aware that each of the State backed banks takes steps to ensure proper risk management and governance structures are in place (supported by robust internal audit structures). Further details of these steps are set out in the annual reports of each of the State backed banks.  In addition to this, each of the State backed banks is subject to independent external audit review and o...

66. Deputy Pearse Doherty asked the Minister for Finance the timeframe and to what extent the activities of State backed banks are monitored to ensure they are operating in a way that will not leave the State open to financial or reputational damage. (Question 40726/14 asked on 23 Oct 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 65 and 66 together.
The Deputy will be aware that each of the State backed banks takes steps to ensure proper risk management and governance structures are in place (supported by robust internal audit structures). Further details of these steps are set out in the annual reports of each of the State backed banks.  In addition to this, each of the State backed banks is subject to independent external audit review and o...

53. Deputy Pearse Doherty asked the Minister for Finance with regard to the appointment of a person (details supplied) as an independent agent by the special liquidators to examine whether KPMG should be sued for its role in auditing INBS’s books; if this person has been in receipt of any employ of fees from Irish Bank Resolution Corporation since the bank’s liquidation; if his attention has been drawn to any work previously or ongoing by this person for KPMG; if he is satisfied with the independence of the special liquidator’s appointment; if he provided any direction as to who should be appointed; and his views on whether a person from outside the State should have been appointed. (Question 18257/14 asked on 17 Apr 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): Due to commercial confidentiality and sensitivities, and also client/solicitor confidentiality, the Special Liquidators do not propose to provide details of whether there was/are amounts payable by IBRC (in Special Liquidation) to the firm concerned. The Special Liquidators have given significant consideration to which firm should be appointed to carry out an independent review of the legal advice provided to IBRC, INBS and to them by McCann FitzGer...

57. Deputy Pearse Doherty asked the Minister for Finance the steps he will take to make sure the potential sale of €1 billion of mortgages at ICS Building Society does not leave mortgage owners outside the protection of the code of conduct on mortgage arrears. (Question 15757/14 asked on 03 Apr 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): As the Deputy may be aware, in July 2013 Bank of Ireland agreed an amendment to its Restructuring Plan which had been agreed with the European Commission in respect of State Aid received by the Bank. This allowed the Bank retain its life assurance subsidiary New Ireland.  As part of this amendment, the Bank committed to certain substitution measures including the sale of the ICS distribution platform together with, at the option of a purchaser, up to...

54. Deputy Pearse Doherty asked the Minister for Finance the input he had into the review of the Royal Bank of Scotland; and if he will make a statement on the matter. (Question 11358/14 asked on 06 Mar 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 54 and 55 together.
The Deputy will be aware that, following the review by the UK Treasury in Autumn 2013, RBS reaffirmed its commitment to the Irish market. As part of that process, Treasury officals engaged with officials from my Department.  RBS is currently reviewing the operations of Ulster Bank in Ireland with a view to creating a sustainable business model and on 27 February 2014, RBS re-iterated its commitment...

55. Deputy Pearse Doherty asked the Minister for Finance the input he will have into a future review of Ulster Bank’s operations. (Question 11359/14 asked on 06 Mar 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 54 and 55 together.
The Deputy will be aware that, following the review by the UK Treasury in Autumn 2013, RBS reaffirmed its commitment to the Irish market. As part of that process, Treasury officals engaged with officials from my Department.  RBS is currently reviewing the operations of Ulster Bank in Ireland with a view to creating a sustainable business model and on 27 February 2014, RBS re-iterated its commitment...

185. Deputy Pearse Doherty asked the Minister for Finance his views on whether the accounting policy (details supplied) is consistent with his assurances that banks do not systemically overvalue assets in their published accounts; and if he will make a statement on the matter. (Question 7786/14 asked on 18 Feb 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): As the Deputy is aware,  the rules relating to the correct valuation of assets are determined by the relevant accounting standards and I have alluded to this in my reply to a previous Parliamentary Question on 28th January. These rules apply to all categories of assets, including assets classified as held for sale. The Deputy will also be aware that it is the responsibility of the Board of Directors of a company to ensure that these rules are properl...

186. Deputy Pearse Doherty asked the Minister for Finance if the Central Bank has ever investigated any bank in the State for hiding losses in its accounts; and if he will make a statement on the matter. (Question 7789/14 asked on 18 Feb 2014 - Banking Sector Regulation)

Minister for Finance (Deputy Michael Noonan): I have been advised by the Central Bank that the Bank is not in a position to provide me with a response to this question. However, if the Deputy can provide more specific details on the nature of his query, I will revert to the Bank for a reply. 
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