Brian Hayes MEP today said the tracker mortgage scandal could raise supervisory concerns which would force the ECB to take action against Irish banks. The Chair of the ECB’s Supervisory Board, Daniele Nouy, confirmed in a letter to Mr. Hayes that if banks are required to pay substantial compensation to customers, this would raise concerns for the ECB.
“It is welcome that the ECB, as the main supervisor for the large Irish banks, has responded to the tracker mortgage scandal. This is a scandal that has forced much hardship on Irish mortgage holders and we need to get to the bottom of how this happened.
“While the ECB accepts that the authority most equipped to look into the scandal is the Central Bank of Ireland, it is good to see that the ECB can take action if the tracker scandal can becomes a systemic threat.
“There is rightly going to be heavy fines for Irish banks and compensation will have to be paid to customers who have been wronged. The ECB has confirmed that it is ready to deal with the fallout if the fines becomes so substantial for banks that they would not hold enough capital against their operational risk. The ECB could also look into the adequacy of Irish banks’ governance systems.
“The ECB confirmed that it cannot investigate conduct supervision issues in banks; that is a job for the Central Bank of Ireland. The ECB is tasked to investigate the health of banks’ balance sheets from a systemic risk perspective.
“While there are no current indications that this scandal could represent a systemic threat, there are still a lot of questions about the full extent of the scandal. The Central Bank is continuing its investigation.
“What is really important at the end of this process is that there are answers for all those who were affected. Separately, I have asked the European Commission to investigate the scandal from a competition perspective and to see whether banks colluded together, acting as a cartel. The Commission is currently monitoring developments related to the issue and has encouraged whistleblowers to come forward if they have information about the activities of the banks.
“If Irish banks want to regain the trusts that was slowing coming back after the financial crisis, they need to be completely open and transparent throughout this whole process. We still have not had an adequate explanation from banks and that is a problem. Until we got proper answers, I think that trust in Irish banking will continue to suffer.”