Rules hold implications for banks

The introduction of the Basel III banking regulations will have huge implications for the Irish banking sector, particularly the ability of banks to write off unsustainable mortgage debt.

The banks face another round of stress tests in July. This will determine whether they will need to be recapitalised. If State-owned Permanent TSB or AIB fail the stress tests, they will have to look to the Government or possibly the European Stability Mechanism for more capital. However, the stakes are much higher for Ulster Bank and Bank of Ireland.

The Government has a 15% share in Bank of Ireland. Ulster Bank is a wholly owned subsidiary of Royal Bank of Scotland, which is 82% owned by the British state.