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Thursday 8 June 2023 Dublin: 10°C
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# Debt forgiveness
Banks' capital cannot be 'frittered away' - Noonan
Finance Minister Michael Noonan said this morning that banks need to distinguish between those who can’t pay and those who will not pay their mortgages.

FINANCE MINISTER MICHAEL Noonan said today that capital at Irish banks cannot be “frittered away” through a blanket programme of debt.

Speaking on Morning Ireland, Noonan said the Government is working on a principle that banks need to distinguish between those who can’t pay and those who will not pay their mortgages.

He said that the issue of rising mortgage arrears is a “priority” for the Government and a report on the matter will be published in three weeks by a key policy group.

A lot of work has been done to examine the domestic mortgage books at Irish banks, he said.

“From the Government’s point of view when we’re approaching [this issue] we’re looking at a number of principles. We want as many people as possible to retain their own homes. We don’t have a policy of repossesion in this country.

Clarifying comments made on Tuesday that banks had enough money to cover mortgage debts, Noonan said, “It is not a question of coming up with a new pool of money from taxpayers to deal with bad debt. The tax payer has already made a very big contribution.”

Problem is not ‘snowballing’

Despite admitting to his concern about the level of mortgage debt, Noonan said the problem is not “snowballing”.

He said that he knew that there was going to be progression in the number of people in arrears on their mortgages since the banking system stress tests last March.

Figures released yesterday showed that one in 14 mortgages in Ireland is now in arrears of 90 days or more.

Although he said the Government was aware of the “very difficult situation” that some families are in, Noonan added that there were only 58 compulsory repossessions ordered through the courts in the “past 12 months or so”.

“This is quite small when compared to the number of people who are in difficulties with their mortgages,” he said.

He also pointed out that there is a difference between people in arrears and those in negative equity.

“There are a lot of people in negative equity who do not have a problem in making their payments,” Noonan said.

Prudent banks

Noonan also spoke to Newstalk‘s breakfast radio programme this morning, stating that banks have the money to write off debts of those who cannot afford their mortgages.

However, he added that banks have to be prudent with their capital and continue to be viable.

Decisions on any policy on mortgage debt relief will not be made until the report is published in three weeks time, Noonan told Newstalk presenter Ivan Yates.

“It will be a “priorty” once we get the report. It will be sent to the Government’s economic council and we don’t hang around. We get things done pretty quickly,” said Noonan.

The report is being drafted by “key policymakers”, including those from from the Department of Finance, the Department of Social Protection and the Central Bank who will be “examining the hard facts and will come forward with the recommendations”.

More: Govt rules out blanket debt forgiveness – but Noonan says banks can write off mortgages>

Read: 10 things you should know about Ireland’s mortgage debt and arrears>

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