Chairman Ciarán Lynch
The last time out, you were hesitant about issuing targets. Why did you change your mind?
Honohan: We don't want to rely exclusively on targets , or any one target.
Lynch: You have achieved two objectives
1)
2)
Honohan: By the way, the Troika loves targets. Stuff gets done. Sometimes in an unsatisfactory way.
Lynch: But letters seem to be defined as a resolution process. I think it's a commencement. Not a resolution.
Honohan: The bank has had no correspondence from the borrower - the letter is the only way to initiate a solution - but it's only the beginning , not the result.
for one bank, of the cases where they have sent the letter, 80% are more than one year in arrears, 50% are more than 2 years in arrears.
Sustainability
Lynch: AIB, BoI and UB say that they are prohibited from going into resolution process into retirement. For example, someone with positive equity who can pay the interest in retirement, can't be made unsustainable
Honohan: They are wrong "the age limit is 70, unless there is evidence that a longer age can be justified"
Lynch: Is your positioning softening on this?
Honohan: This is a complicated area -
We did not roll out our sustainability guidelines in March,because...
We have tried to get this wording to accommodate as many cases as possible
This is a new area, so there will be misunderstandings.
No other countries have a scheme like this.
These rules will change as the situation evolves
Lynch: Planning something for 20 years for a 30 year old is not approprate. The resolution process can be much shorter.
Honohan: We want clarity.
Lynch: The UB concession mortgage. Is that an acceptable process?
Honohan: We would like a bit more clarity but we like it.
Lynch: we would like to see consistency. - For example with aib there is no interest on the warehouse. Bank of Ireland are charging interest. However, boi are looking at distinguishing between trackers and SVRS -
Are some of these solutions/approaches not sustainable?
Honohan: Some are not going far enough
Lynch: Can you give me an example
Honohan: The BoI split mortgage does not give sufficient clarity at the end. The rate of interest is not the Key. what happens at the end is key.
(BB view: Honohan is wrong on this. The interest rate is the most important issue. BoI should not be giving interest rate )
Honohan: I have been too forthcoming in discussing individual banks