Irish banks have 'outstanding issues' - Mario Draghi

Monday 24 March 2014 22.17
Mario Draghi said Irish banks needed to address the large stock of non-performing loans
Mario Draghi said Irish banks needed to address the large stock of non-performing loans

The President of the European Central Bank has said Ireland's banks face "outstanding issues which still require to be addressed".

Mario Draghi highlighted the need to complete "restructuring and reforms", addressing the "still very large stock of non-performing loans" and "ensuring the viability of all nationalised banks".

Mr Draghi made the comments in a letter to Fianna Fáil's finance spokesman Michael McGrath.

Mr McGrath had written to the ECB boss regarding tests of the Irish banks by the Central Bank last year.

Mr Draghi pointed out the assessments by the Central Bank were "different in nature" from stress tests that will be conducted later this year by the ECB.

He said the Irish assessment "was not forward looking and did not include a stringent stress test".

Mr Draghi said: "Let me emphasise that Ireland continues to benefit from the support of the Eurosystem.

"That support has been quite extraordinary over recent years.

"The ECB remains in close contact with the Central Bank of Ireland with regard to the situation of the Irish banking sector."

Mr McGrath said the letter was far more "sober" than the assessment of the banks by the Government.

He added the ECB was "distancing" itself from tests of the banks by the Central Bank last year.

Mr McGrath said he was "deeply concerned" that Mr Draghi has raised a question about the "viability of all nationalised banks".

He said: "I can only assume that the ECB President's remarks are a pointed reference to State-owned Permanent TSB.

"His comments should be interpreted alongside the fact that a restructuring plan for Permanent TSB was first submitted to the European Commission in June 2012 and still has not been approved.

"It is well past time for the Department of Finance to redouble its efforts to secure agreement with the European Commission on the restructuring plan for Permanent TSB."

A spokesman for Permanent TSB said the Minister for Finance Michael Noonan had spoken about the importance of the role of the bank in the past. 

The spokesman said "good progress" had been made on the lender's restructuring plan. 

Permanent TSB is due to give a full update when it publishes its results on Wednesday. 

This will cover dealing with arrears, re-entry to the mortgage market and its plans for its non-core businesses.