The Government has given a commitment in the revised rescue agreement with the EU and IMF to centralise financial information on all borrowers for the first time.
A new condition in the draft memorandum of understanding states the Government will develop a legal framework that “would facilitate the collection and centralisation of financial information on borrowers”.
The revised memorandum, agreed last month, gives a commitment that proposals will be submitted to the Minister for Finance by the end of September. “The establishment of such a framework will improve the information available to banks to make sound credit assessments,” it states.
Until now, the pooling of information by the banks under the Irish Credit Bureau was confined mainly to consumer lending.
The new system would comprise a wholesale reform of credit risk management as it would include business loans, development loans and credit union loans. None of these is subject to comprehensive credit information systems. A Government working group was established to examine this issue late last year.
The 43-page draft memorandum, published on the Department of Finance website last night, accepts that some of the specified austerity measures in the budget later this year can be altered. However, the cost of any changes must be offset by alternative savings. Some €3.6 billion in adjustments are needed this year.
The document also says representatives of the Minister for Finance and the Central Bank will observe the work of the deleveraging committee of the board of each bank, to help banks reorganise their balance sheets into core and non-core assets.
It also requests the Department of Finance to provide quarterly information in four new areas, namely debt falling due for State agencies; local authorities, State-owned commercial companies and the management of job-activation policies.
The memo relaxes the reporting requirement from weekly to monthly on some key data, with the exception of the Central Bank’s balance sheet.
There is a requirement on Government to report on labour market activation measures – in effect reducing dole payments for some long-term unemployed people who refuse offers of training or placement – by the end of September. That date is also the date that the Government must present “a time-bound comprehensive action plan” to deal with the pay rates of registered employment agreements in several sectors of the economy including hospitality, security, cleaning and agriculture.
