# The banks plans for deleveraging



## Brendan Burgess (7 Apr 2011)

The banks are going to deleverage by €70 billion over the next 3 years. 

But at the same time they are going to be given targets for fresh lending into the economy.

So most of the deleveraging will presumably come from the sale of overseas assets. 

John Moran of the Department of Finance is reported in today's [broken link removed] as saying 


> UP TO €25 billion worth of loans will be removed from the banks  through repayments over the next three years, the Department of Finance  official in charge of restructuring the banking sector has said.
> 
> 
> Addressing  an international banking conference, John Moran said this would form  part of the €72 billion deleveraging of the banks. The lenders would  still be able to lend €10 billion a year into the economy and still  shrink the size of their businesses, he said.
> ...



So, it looks as if €25 billion will be repaid by Irish borrowers and €30 billion in fresh money will be lent out.



> Mr  Moran said it did not make sense to remove non-core assets out of the  banks as it would create “too much operational risk” and lead to further  capital losses.



This is in direct conflict with the Central Bank report which suggests that IL&P alone will face a loss of €2.2 billion through the sale of its UK loans. That is €2.2 billion on top of the provisions they are making for credit losses.


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