# Dates for the next Finance Committee meetings with the banks



## Brendan Burgess (20 Mar 2019)

Governor Central Bank scheduled for 26 March
BOI scheduled 4 April
PTSB scheduled 9 April
AIB scheduled 11 April

Brendan


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## SaySomething (20 Mar 2019)

Any word on UB or KBC please Brendan?


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## Brendan Burgess (20 Mar 2019)

That is what I got.


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## tonymac (20 Mar 2019)

I have emailed both Michael McGrath and Peter Burke about the Variable base rate cohorts issues and have asked them to question AIB on them on April 11th. They escaped last time they were in regarding this issue  so the more people that get in touch with committee members the better on their differing issues.


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## tnegun (20 Mar 2019)

I got this response to my email to Michael McGrath a couple of weeks back 
"
I am very familiar with this issue.


On behalf of the party, I have been liaising with the group of affected customers which has been formed on this issue. I imagine XXXXX is aware of the group.


I have raised this issue on many occasions with the Minister, the bank and the Central Bank. It seems to me that the Central Bank is currently backing the bank’s interpretation of this issue.


AIB and the Central Bank will be before the Finance Committee in the next month and I will be pressing them on this again. "


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## tnegun (20 Mar 2019)

I email him again too just in case.


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## delsalmon (20 Mar 2019)

At this stage I've lost all confidence in the Finance Committee and their findings. No real powers and Fianna Fáil aren't going to rock the boat whilst propping up this Fine Gael government.
PTSB veteran


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## Brendan Burgess (25 Mar 2019)

The Central Bank is on tomorrow at 2 pm. 

Brendan


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## Bronte (25 Mar 2019)

delsalmon said:


> At this stage I've lost all confidence in the Finance Committee and their findings. No real powers and Fianna Fáil aren't going to rock the boat whilst propping up this Fine Gael government.
> PTSB veteran


Didn't they get two bank bosses to promise something that helped a load of people in the last year.  I like the FC holding people to account in public.


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## SaySomething (26 Mar 2019)

Central Bank is in Committee Room 3. The meeting has commenced however they are in private session so the cameras and microphones are muted. You can expect it to start public broadcast in the next 15-20 mins or so I'd expect.


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## Brendan Burgess (26 Mar 2019)

You can watch the proceedings live here - starting in a few minutes

https://www.oireachtas.ie/en/oireachtas-tv/cr3-live/


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## Brendan Burgess (26 Mar 2019)

*Full statement attached*

Governor Lane
Derville Rowland - Director of Enforcement
Ed Sibley - Deputy Governor

Strengthening Consumer Protection a high priority for us - embedded in everything we do.
Our mortgage limits protects borrowers from excessive debts.

*Trackers *
40,000 - the same as at December
Cost is up to €665m (?)
300 yet to be paid
We are towards the end stage.

As indicated, this is largely completed.
We expect to conclude the investigation in a few weeks and issue a report thereafter. 

When we say "this is near a conclusion" that is the project .But other groups may emerge.

The sanctions investigation will continue.

*PCPs*
70,000 outstanding contracts
€1.2 billion
From June our CRR will collect information

*Non performing loans *
Our priority is that the financial system is resilient
Capital Requirements - position of banks has improved by a factor of 3 since 2007
Primary funding base much improved

*Mortgage Rules*
Dual role - protects borrowers and banks from excessive lending
Counter cyclical buffer comes into effect on 1 July

*Prevailing mortgage rates *
Historical default rates
level of NPLs today
The typical mortgage has a high LTV compared to europe

The reality is small scale market with a high fixed cost base
Low levels of mortgage switching

Limit number of banks lead to less competition

*non performing loans*
Stock down by 79% since 2013
Restructuring has been the way of dealing with NPLs - 110,000 at the end of last year, with 87% performing.
Repossession must be an option - there must be a risk of loss of ownership.

*Sales of non performing loans *
This is valid
It cuts the national risk. In the event of a downturn, the funds will share the losses.

We have grave concerns about the* no- consent, no sale bill.*
It would damage resilience
Important for securisation and collateral provision
Anyway the vulture funds treat the borrowers the same as the lenders

*Resilience in the Credit Union sector *
We want to see strong CUs in safe hands and in conditions of well-being
We see strong reserves and a continued reduction in arrears.
Challenges remain
High cost income ratio
Low return on asset
28% loans to assets (11% to 73% range)


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## SaySomething (26 Mar 2019)

I think though he said that he expected the investigation to complete within the next number of weeks with the final report to follow. He didn't place an actual date/time limit on either. It could be as late as September before we see that report.


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## Brendan Burgess (26 Mar 2019)

SS. Correct. I have edited my summary. 

Here is the relevant full extract

The supervisory phase of the Tracker Mortgage Examination is now in the final stages.  As of end-February 2019, lenders have identified nearly 40,000 customers who suffered unacceptable harm from tracker mortgages-related failures.  This overall number is unchanged since our last update based on date at the end of December . Total redress and compensation paid has increased by €18 million since the end of December to €665 million now. By the end of this month, we expect the number of customer accounts awaiting redress to be down to about three hundred, which will be mostly paid in April.


In finalising our supervisory work, our focus at all times is to ensure that all affected groups of customers have been identified and remediated. This work has now been completed at the majority of lenders. In the case of the remaining lenders, we are working to ensure that these have addressed satisfactorily any remaining issues affecting groups of customers and all eligible groups of customers have been included for redress and compensation. *We expect this work to conclude in the coming weeks, with a final report published thereafter.* While the “project” phase of our supervisory work is nearing completion, any further individuals or groups that are identified will receive the same treatment under our standard supervisory approach.


Finally, our enforcement work is ongoing. These investigations are detailed and forensic, involving the scrutiny of thousands of documents and the conduct of interviews to establish the exact circumstances of matters under investigation, including the actions of regulated entities and individuals.


While we have a strong suite of existing powers, the findings of our Report into the Behaviour and Culture of the Irish Retail Banks last year set out additional reforms that include the proposed introduction of a new Individual Accountability Framework. This would ensure clearer lines of accountability within firms, as well as providing for an enhanced Fitness and Probity Regime and a unified enforcement process. I appreciate the Committee is holding separate hearings on these recommendations.


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## Brendan Burgess (26 Mar 2019)

*Michael McGrath on trackers *
Is it fair to say that there are no major outstanding cohorts
I am referring in particular to the 6,000 prevaiing   and EBS "base rate" customers
Have you more or less signed off on these cohorts?

*Derville Rowland*
We are in the closing phases.
There are no big customer impact issues that we dispute
We started at 13,000 but the banks capitulated on most
We are still doing due diligence
It's possible that more customers
We are not in dispute

The AIB Group. They have now been included. They have the option of going to the Ombudsman or the Courts
There are some issues with the lenders.
We expect to close out our due diligence in the coming period

*McGrath*
Are you saying that you have made the call on these cohorts?  There is not going to be any fundamental shift.

*Rowland*
Correct.

*McGrath*
Mortgage rates.  A new entrant to the Irish market would have to use a very high capital requirement even for low LTV loans.
It's not likely that a new lender will enter the market , is it?

*[Interrupted by a vote in the house] 

Lane *
Like it or not we had a big crisis.
Like it or not we have a big NPL problem 
Any regulator would ask is it prudential to lend into Ireland

For non-banks, they have to raise money on the financial markets. And they are not coming in with super low mortgage pricing.

This is not the place to look got... 

In time as the market stabilises 

*Sibley *
We need to differentiate between a large bank which wants to set up in Ireland
On initial lending, they would need standardised lending 
But that is not lower than the IRB models 
They would need a period of time to develop their own risk rating
A start up bank would be on the standardised model for a longer time

*McGrath *
Do you still support cash-backs? Are consumer in the round, in the aggregate, well served by them?  Have you come to a clear conclusion? 

*Derville *
A competitive market which offers plenty of choice is in the best interest of consumers. As long as they are clear and properly sold, they have a role to play.  If people switch after a couple of years, then cash backs can be the cheapest. 

A lot of customers could save if they switched. 

There would be no role for the Central Bank to intervene on cash backs. 

*Lane *
We are neutral - we don't support one product over another. 

It would take a lot to shut down an option. If the mis-selling risk is managed, these are commercial choices. 

*Sibley*
I can understand the degree of impatience over mortgage rates. A lot of the dysfunction has been eliminated over the last few years. The lowest rate is 2.3% for a two year fixed.  Switching is now up to 12% of transactions.


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## Brendan Burgess (26 Mar 2019)

*Pearse Doherty 
*
Is the voluntary code on the sale of mortgages still in effect.

*Lane: *yes.

Doherty: I have taken your code and put it into the proposed legislation
Now you say your own code will create a nightmare

*Lane*
1) There is a difference between the volutnary code and a compulsory code
2) The code does make an exception for financial distress - your bill does but it's too narrowly defined
3) The code was developed 30 years ago in a different market

*Derville *
It arose in 1989 when the CB took over Building Society regulation.
It was to protect members of the Building Society so that they would not lose their voting rights.
We would never now issue a voluntary code

This proposal does not give any additional rights to customers

*Lane *
The loan sales are important from a national point of view. It's an excessive level of risk.

*Pearse *
There is a trend here. The ECB, Central Bank and Dept of Fiance come out with scaremongering.  We had it with mortgage rate bill. We also had it with the vulture funds bill. But that bill has passed and interest rates have not gone up.

It is not the intent to stop passive securitisation. It is about giving the power to the borrower to stop the sale to a vulture fund, if they want to stop it.

Borrowers are always better off with a bank than a vulture fund.

The regulation is the same but the funds don't offer the same restructuring options.

*Lane*
OK, so are the outcomes different between a bank and a vulture fund. We don't see a systemic issue.

*Pearse *
No, debt advocates will tell you that they treat customers differently from lenders.

*Lane *
Your supposition is that a bank with its long term commitment will treat customers better.
But vulture funds buy at a discount and don't have the same capital requirements.

I don't agree with your hypothesis that banks treat people better.

*Pearse *
But the debt advocates tell a different story. You looked at only a very small sample.

AIB's Project Beech. How many private homes are in that sale?

*Sibley*
What are the wider implications of this intervention?  It will push up interest rates.

Up to 40% of loans have been securitised.  It's down to 23% now.

*Pearse *
AIB has said that there are no private homes, but there will be some in the 8,000 loans sold.  Do you know how many?

*Sibley *
We can't get into the specifics. In the past, home loans were sold when there were connections to commercial property.


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## YerGrand (26 Mar 2019)

Brendan Burgess said:


> *Michael McGrath on trackers *
> Is it fair to say that there are no major outstanding cohorts
> I am referring in particular to the 6,000 prevaiing   and EBS "base rate" customers
> Have you more or less signed off on these cohorts?
> ...



Brendan, could you clarify please as I didn't see this.  Are the CB saying that there are no new cohorts?  Or are they saying the EBS Variable Rate are excluded from redress?  Are they saying that the only option is to go to the Ombudsman or the Courts?  Thank you.


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## Brendan Burgess (26 Mar 2019)

It's very hard to clarify anything that the Central Bank says. 

But it's seems clear that they have signed off on the major cohorts. So I would not expect them to bring the EBS group into the redress scheme.

Brendan


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## zxcvbnm (26 Mar 2019)

I’m completely confused by the above. Does this mean the 6000 AIB group have to ho to high court ? Was there a prospect that the bank could have announced today that they would Have confirmed they will Also compensate us?


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## SaySomething (26 Mar 2019)

zxcvbnm said:


> I’m completely confused by the above. Does this mean the 6000 AIB group have to ho to high court ? Was there a prospect that the bank could have announced today that they would Have confirmed they will Also compensate us?


What she said was that the AIB group were considered impacted by the investigation. That the banks decision on rolling back onto a tracker was open to appeal, Ombudsman, and Courts. Basically the central bank seem to be at a roadblock with the bank and they expect the account holders to challenge them further on the rate they should be on now.


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## Brendan Burgess (26 Mar 2019)

As far as I can figure out, what they are saying is that the Central Bank has done all that it intends to do. 

It's not clear to me whether that is because they think that the AIB prevailing rate cohort have no case or whether that is because they can't persuade AIB to give them cheap trackers. 

But the outcome is the same anyway. It will have to be resolved without any further help from the Central Bank.

Brendan


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## B26354 (26 Mar 2019)

Brendan Burgess said:


> It's very hard to clarify anything that the Central Bank says.
> 
> But it's seems clear that they have signed off on the major cohorts. So I would not expect them to bring the EBS group into the redress scheme.
> 
> Brendan


Disappointing but not surprised. Good to see McGrath at least name the variable base group as having an arguable case. There is lots of evidence to support the EBS variable base argument in the round as demonstrated by the thread on this site. The Central Bank likely considered this but they obviously felt they couldn’t apply a blanket redress to all individual variable base customers when there is such variation across this group compared to other cohorts.

For instance some customers were informed by EBS agents that the variable base rate is a tracker and even received documentation confirming same but some didn’t and may even have thought they would revert to a SVR after their fixed rate. Other variable base customers even signed tracker application forms but many others didn’t & in some cases there is no evidence of any application forms being completed. 

Even though I know it’s a rate that tracked the ECB base rate at a particular margin this was not explicitly stated on loan offers. Of course lots of information was not included in these EBS loan offers such as clear definitions of the rates and the variable basis of the fixed rate loans. The only argument that can be used by all variable base customers is that the term itself is ambiguous. If it wasn’t an ambiguous term then why did EBS stop using “variable base rate” in their loan offers in 2008-2009 & reverted back to calling it a variable rate or SVR?The ombudsman or court can sort that out but they must favour the customer if they deem it to be ambiguous.


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## tonymac (27 Mar 2019)

Hi B26354, very good piece, thankfully Michael McGrath came up.trumps for us again. I have asked him.could he raise things with AIB on 11th April on our behalf. I also recently sent in documentation to Padraig Kissane and on a letter i wrote to him i mentioned some about how my partners mortgage had currently 5% on it and started her mortgage in May 2007 and how a fellow contributor on this site had currently 5.25% on theirs and started theirs in August 2007 with an ECB increase sandwiched in between both on 13/6/07 going from 3.75-4%, no coincidence in my book. In the meantime we await 11th April and Padraigs opinion.


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## SaySomething (3 Apr 2019)

The BOI hearing tomorrow is scheduled from 9.30am.


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## Brendan Burgess (4 Apr 2019)

The Committee is talking about insurance this morning. 

I understand that Bank of Ireland will be on at 3pm.

Brendan


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## Trackman (4 Apr 2019)

Can't wait for Aibs tripe next week


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## Gimmestrength (9 Apr 2019)

Sorry if I missed it but do we know if and when KBC will be before the committee ? Thanks


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## SaySomething (11 Apr 2019)

10AM so it should be on now - Committee Room 2 live feed available on www.oireachtas.ie


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## Neverever (11 Apr 2019)

That’s great I didn’t get to see it. Looking forward to getting to see it later , will it be available later this eve for viewing ? Or does it usually take a bit longer ?


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## Madness (11 Apr 2019)

Any dates for UB?


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## Leighlinboy (11 Apr 2019)

Anything of interest from KBC ? Thks


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## SaySomething (11 Apr 2019)

Madness said:


> Any dates for UB?


It looks like they won't attend until May as their examination/redress/compensation is not yet complete. They say it'll be done by the end of April.


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## Gimmestrength (15 Apr 2019)

Anyone heard any news on if/when KBC are before the committee ?


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