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 Header Item Strategic Banking Corporation of Ireland Bill 2014: Committee Stage (Continued)
 Header Item Business of Dáil
 Header Item Strategic Banking Corporation of Ireland Bill 2014: Committee Stage (Resumed) and Remaining Stages

Thursday, 10 July 2014

Dáil Éireann Debate
Vol. 848 No. 1

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(Speaker Continuing)

[Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty] That is my concern in that regard, which I think has been well flagged.

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan That will be governed by the legal contractual arrangements that are drawn up.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty We will see how it plays out.

  Amendment put and declared lost.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I move amendment No. 6:

In page 6, between lines 16 and 17, to insert the following:
“(2) Following the passing of this Act the Minister shall direct the Central Bank to publish the SME debt restructuring targets for banks and the performance of the banks in reaching these targets on a quarterly basis.”.

This provides for the inclusion of an additional subsection which provides that the Minister shall direct the Central Bank to publish the SME debt restructuring targets for banks and the performance of the banks in reaching these targets on a quarterly basis. There are two issues involved here. First, the targets must encompass all of the institutions, not just the State institutions or the pillar banks. Second, there must be transparency regarding what are the targets and how banks are meeting those targets. That is particularly important given that we will now have a State guaranteed fund that could be lending to institutions that might not be reaching the targets laid down by the Central Bank.

  It is important that there is transparency about this. As was mentioned earlier by my colleagues, the finance committee looked at how the banks are dealing with people in mortgage arrears. In my view, the finance committee should also examine that issue in respect of small and medium enterprises. A very esteemed economist has suggested that this is a serious issue that the Department and the Central Bank must address, and I know there has been some engagement by the Central Bank with the professor in that regard. However, there must be transparency about the system. Given that we are dealing with on-lending to institutions that may have targets laid down for them by the Central Bank and that may or may not be meeting those targets, it is important that some transparency is brought to this, that the debt restructuring targets are disclosed and published and that performance in meeting those targets is published on a quarterly basis.

  Progress reported; Committee to sit again.

Business of Dáil

Minister of State at the Department of the Taoiseach (Deputy Paul Kehoe): Information on Paul Kehoe Zoom on Paul Kehoe It is proposed, notwithstanding anything in Standing Orders or the order of the Dáil of this day, that a division demanded on the Second Stage of the Court of Appeal Bill 2014 tomorrow, 11 July 2014, shall be postponed until immediately after the Order of Business on Tuesday, 15 July 2014.

  Question put and agreed to.

Strategic Banking Corporation of Ireland Bill 2014: Committee Stage (Resumed) and Remaining Stages

Debate resumed on amendment No. 6:

In page 6, between lines 16 and 17, to insert the following:
“(2) Following the passing of this Act the Minister shall direct the Central Bank to publish the SME debt restructuring targets for banks and the performance of the banks in reaching these targets on a quarterly basis.”.
-(Deputy Pearse Doherty)

Minister for Finance (Deputy Michael Noonan): Information on Michael Noonan Zoom on Michael Noonan First, the proposed amendment is well beyond the Long Title of the Bill. To use this legislation as a vehicle to compel the Central Bank to publish statistics about the restructuring of loans would certainly be in the Long Title of the Bill, so it is not an appropriate amendment.

Second, as the Central Bank is an independent body and is already equipped to deal with such matters, it would not be appropriate or, indeed, legal for us to seek to direct it in the manner in which it communicates information as it exercises its independent functions.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty I know it is beyond the scope of the Bill in terms of the Long Title, but we can change the Long Title on Report Stage if we wish. That is clear. The point is that this is relevant to what we are discussing here. Whether it is the Central Bank or the Minister directing it to do so is immaterial, and obviously there is an issue in that regard, but the real issue is that these targets should be published, and the Minister can ensure they are published. The mortgage arrears targets are published on a quarterly basis. The Department of Finance publishes its own figures.

I hope the Minister will go beyond the reasons he has given for not doing this in his next contribution. Why should we not publish the quarterly targets set down by the Central Bank? Does the Minister think it is not in the public interest to have them disclosed and published, so we will be able to measure whether the banks are dealing with this in an appropriate way and with the appropriate actions? Does he believe it is best that they are kept private? In light of the fact that we are establishing a company which will on-lend to some of the institutions that have targets laid down for them, does the Minister not think it is appropriate that transparency be brought to this issue at the time the company is being established?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan With regard to the issue of SME debt, it should be noted that the Central Bank does not publish figures on arrears on non-performing loans specific to the SME sector. In June 2013, the Central Bank set quarterly institution-specific performance targets for covered banks to move distressed SME borrowers onto long-term forbearance solutions. The targets set reflect the banks' capacity and processing systems. The Central Bank has informed the officials in the Department of Finance that the banks have reported that they have met their required targets to date. This perspective has been re-affirmed by both the IMF and the European Commission, who report that the work-out of SME arrears is progressing and that imposed targets are being met.

Recently published results from the covered Irish banks indicate that both banks are well advanced in restructuring their SME loan books. Bank of Ireland's most recent published results indicate that it has reached resolution in 90% of distressed SME cases. Similarly, the AIB results indicate a resolution level of approximately 65%. It is also worth noting that defaulted loans for both banks have reduced year on year.

The Central Bank's process of assessing financial institutions in their efforts to move the stress tests of re-borrowers onto longer term sustainable solutions is an important element in assisting SMEs to potentially transition from a distressed to a more sustainable state, and will continue in 2014. Additionally, the Government's decision to fast-track legislation to allow small companies, as defined by the Companies Acts, to apply to the Circuit Court for examinership and the ongoing work of the Credit Review Office, which has been given an expanded remit, are all initiatives that will assist viable SMEs in addressing their debt situations.

Deputy Pearse Doherty: Information on Pearse Doherty Zoom on Pearse Doherty In case I missed it, does the Minister believe these targets should not be made public? Does he believe the targets should continue to remain private or that we should have transparency in respect of the pillar banks as to what the targets are and how they are meeting them?

Deputy Michael Noonan: Information on Michael Noonan Zoom on Michael Noonan My position is that it is a matter for the Central Bank, which is independent in the exercise of its functions and which particularly exercises that independence in its dealings with the licensed banks, to which it provides the licences.

  Amendment put and declared lost.

  Question proposed: "That section 2 stand part of the Bill."

Acting Chairman (Deputy Robert Troy): Information on Robert Troy Zoom on Robert Troy I should point out that there are only three minutes remaining and if everybody is brief, everybody will get an opportunity to speak.

Deputy Richard Boyd Barrett: Information on Richard Boyd Barrett Zoom on Richard Boyd Barrett Three minutes remaining of what?

Acting Chairman (Deputy Robert Troy): Information on Robert Troy Zoom on Robert Troy The Bill is being guillotined at 4.42 p.m.

Deputy Stephen S. Donnelly: Information on Stephen Donnelly Zoom on Stephen Donnelly You must be kidding.

Acting Chairman (Deputy Robert Troy): Information on Robert Troy Zoom on Robert Troy That was agreed. There are three minutes remaining. I call Deputy Michael McGrath.

Deputy Michael McGrath: Information on Michael McGrath Zoom on Michael McGrath It is a joke that we are required to put through a legislative measure of this importance in this manner. It is unacceptable and farcical and we really should not accept it. We have dealt with only six amendments and other important amendments will not be even debated. I do not wish to use all the minutes remaining but I have some practical questions for the Minister. Will there be minimum loan amounts under these products?


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