The Central Bank believes it is time to do just that and is encouraging a more realistic approach to provisioning and, as I will explain below, we would like to see a determined effort to identify unsustainable mortgages requiring loan modification. Where does that leave the banks’ capital position for the future?
We already know that over the medium term, in the period leading up to implementation of Basel 3 in 2019, that the banks will likely require more capital.