Central Bank orders lenders to be more conservative

THE Central Bank yesterday ordered lenders to use more conservative provisioning for bad loans and increase the frequency of disclosures to boost confidence in the financial sector.

The guidelines, which are expected to raise bad loan provisions across the sector, were issued following Ireland’s EU/IMF bailout after the near-collapse of the banking sector under the weight of property-related loan losses.

They should be used in the preparation of 2011 results of the four banks covered under a government guarantee: AIB; Bank of Ireland; Permanent TSB; and the Irish Bank Resolution Corporation, the new name for the merged Anglo Irish Bank and Irish Nationwide Building Society.