Extent of mortgage losses to affect Ireland’s full return to markets

The extent of the losses facing banks on the back of the mortgage arrears crisis will have huge implications for Ireland’s prospects of making a full market re-entry at the end of the IMF- EU bailout programme next year.

Minister for Finance Michael Noonan said that, following the latest troika review, the banks were sufficiently capitalised to withstand growing mortgage losses. However, market sources are increasingly sceptical that this is the case.

The results of stress tests in Mar 2011 found that €24bn would have to be pumped into the banks to bulletproof them against future losses. A total of €13.3bn was injected into AIB, €5.2bn into Bank of Ireland, and €4bn into Permanent TSB.