Selling loans to vulture funds not a solution

If past is prologue, then this week’s 10th anniversary of anxious queues forming outside Northern Rock should serve as a reminder that in banking everything is fine until it isn’t fine.

However in our post crisis economy that seems to defy normal rules, this maxim does not appear to have been fully absorbed by the Central Bank. The recently published mortgage arrears figures confirm the Central Bank’s continued indulgence of the elevated levels of non-performing loans with only marginal improvement in the number of actual long term resolutions that involve any form of debt write down.

In the years before the crash it was one of the core components of the Central Banker’s rulebook that banks could not sustain double-digit levels of non-performing loans. However the Irish banking system as a whole is still burdened with high levels of non-performing loans that could lead to problems in the next economic slowdown.