# Brian Hayes: ECB should take tracker loans off the Irish banks



## Brendan Burgess (19 Nov 2014)

*ECB must step up to plate and help resolve our mortgage issues*



> By taking the tracker loans from Irish banks on to its own balance sheet, the ECB can unlock this problem.
> 
> 
> Recently the ECB has established through its Asset Backed Security programme a vehicle to do just that.
> ...


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## Brendan Burgess (19 Nov 2014)

What is meant by "Irish banks" here?  The biggest issuer of tracker mortgages is Bank of Ireland, where the state has a 15% stake.  KBC, Bank of Scotland and Ulster have big tracker books also.

As it happens, AIB has the lowest proportion of tracker mortgages of any of the banks. 

So this proposal would primarily be helping out the private shareholders in the banks which operate in Ireland. 

The ECB has already provided lots of very cheap money to the Irish banks when they couldn't borrow it anywhere else.  I don't accept that they should be asked to do more. 

Of course, if a borrower owes money to the ECB, they are far more likely to default. 

Does the proposal include taking the cheap buy to let trackers  off the banks? 


The default rate on tracker mortgages is not low as can be seen from the attached extract from the Central Bank's [broken link removed]


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## ashambles (19 Nov 2014)

> At the same time, banks have around €50bn of loss-making tracker mortgages on their books.


If it's in any way a normal commercial transaction then the ECB would need to buy them at a hefty discount (more write downs for the banks). 

I'm not sure calling it the "Grand Bargain" helps either.


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## TRS30 (19 Nov 2014)

ashambles said:


> If it's in any way a normal commercial transaction then the ECB would need to buy them at a hefty discount (more write downs for the banks).
> 
> I'm not sure calling it the "Grand Bargain" helps either.



I thought it was widely accepted that due to the cheap ECB funding that the majority of trackers where not loss-making for the banks?


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## Brendan Burgess (19 Nov 2014)

Hi TRS 

1) The banks have weaned themselves off the cheap ECB funding almost completely. 
2) Bank of Ireland's cost of funds (1.15%) is around the same as the tracker yield(1.2%), but they have service and bad debt costs 
3) The other banks have a cost of funds around 0.5% above the cost of funds. 

Brendan


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