DUBLIN, Sept 30 Ireland's central bank is not
satisfied with lenders' continued efforts to tackle high levels
of non-performing loans, which remain a significant problem, a
senior official said on Friday.
Unlike in some other euro zone countries, non-performing
loans (NPLs) have been falling in Ireland since peaking in late
2013, but at 45 billion euros ($51 bln), they still represented
19 percent of the five main Irish banks' combined loan books at
the end of June.
The loans, mostly extended for house purchases just before
the bursting of Ireland's property bubble in 2008, remain a
blight on lenders, borrowers and the wider economy, said Ed
Sibley, director of Credit Institutions Supervision at the
Central Bank of Ireland.
"Notwithstanding the considerable work that has been done,
we are not satisfied that progress and momentum is being
maintained at an appropriate rate," Sibley said in a speech at a
banking conference in Dublin.
"I do recognise that individual cases may be getting harder,
that management attention may have been diverted to other
issues, and that the legal process is long. But that does not
mean it is acceptable that the incentives to slow down efforts
should start to impact on the efforts to address this blight."
He also said that the central bank has seen some evidence of
a return to the more aggressive lending practices and cultures
of the past, saying some memories "appear to be surprisingly
"Uncertainty of the future is increasing and there is no
excuse for any of us to ease up on our efforts to address the
high levels of NPLs that are still such a problem for the Irish
economy and society," Sibley said.
With Ireland's economy fast recovering, Sibley said the
incentives to act more slowly to tackle bad loans include
lenders waiting for underlying collateral values to rise or
borrowers' circumstances to "miraculously" improve beyond what
is reasonably expected.
As a result, around 20 percent of the five banks' 43,000
residential mortgages in arrears for more than 90 days - and a
similar amount of their troubled buy-to-let books - still have
no reported resolution agreed between borrower and lender.
Sibley warned that high levels of NPLs would continue to be
reflected in higher regulatory capital requirements being placed
on banks. There will also be knock-on effects for the pricing of
new and existing lending as well as a likely stifling of
competition as bad loans deter new entrants to Ireland's banking
sector, he said.
($1 = 0.8918 euros)
(Reporting by Padraic Halpin; Editing by Susan Fenton)