Nonetheless it is a timely reminder that much remains to be done to improve the resilience of the domestically focused banks operating in Ireland. Financial strength will remain a focus for the Central Bank together with the ECB in our ongoing engagement with the banks. *** Main Challenges Although the domestically-active banks in Ireland have continued to recover, significant risks remain on the horizon.
All have relatively concentrated business models, focused primarily on Ireland and to some extent the UK. This makes them especially vulnerable to any shocks affecting the Irish economy. Legacy issues also remain material. This is particularly evident with regard to NPLs, but also in the need for significant investment in IT and data infrastructure, where investment has not been sufficient in recent years.