IMF's 12th report of Ireland’s bailout program


Irish Bank Provisions Rise to Speed Loan Restructures, IMF Says
2013-12-19 16:00:00.7 GMT
By Joe Brennan
Dec. 19 (Bloomberg) – Irish central bank pressure on the nation’s bailed-out lenders to increase loan-loss provisions after assessing their balance sheets will speed up the restructuring of distressed loans, according to the International Monetary Fund.

  • The central bank finds it “appropriate” that banks book a
    “significant increase in provisioning,” the IMF says in
    12th report of Ireland’s bailout program
    • Says increase largely reflects collateral valuations and
      fact that central bank is pressing banks to initially
      still classify restructured loans as impaired assets
    • Says some banks may need to increase their risk-weighted
      asset levels
  • Says while banks currently don’t need more capital, with
    14.1% end-June average core Tier 1 ratios above 10.5%
    regulatory minimum, this doesn’t exclude potential for
    capital needs after ECB stress tests next year
  • Says ability to forecast banks’ profits is impacted by their
    inability to assess revenue contributions from non-
    performing, modified and forborne loans “as the banks
    continue to accrue and capitalize an unspecified amount of
    interest income that is not actually paid”