Elderfield warns repossessions will rise significantly

Financial Regulator and deputy Central Bank governor Matthew Elderfield has warned that respossessions will rise significantly as a result of the new Central Bank policy on mortgages.

"Various factors have temporarily restrained lenders but it is an unpalatable fact in light of the severity of the crisis that repossessions must be expected to rise significantly," he said.

Although Minister for Finance Michael Noonan insisted there will be only "very few" repossessions, he said there was no difference between what the Government and Central Bank were saying.

"We think that there will be very few repossessions but obviously there will be more than are at present because there are none at present… because nobody is obliged to conform with respossession because there's a flaw in the law," Mr Noonan said.

"There might be a difference in tone but there's no difference in what we're saying. It's the final option. I presume it will be exercised in a number of cases. But I couldn't possibly assess what the number of cases will be but my view is that it will be very small and as a matter of policy we want it to be very small."

Mr Noonan said there was no reason for people to mistrust the banks, as their management and boards had been replaced since the crash.

"Quite a lot of people will be sorted out pretty quickly in a way that's sustainable," he said.

"I think that all our banks are moving into a pretty good position now. We have to have sanctions but I don't think the sacntions will have to be applied because the Central Bank is going to monitor this very very carefully and push it hard."

The Minister was confident that the banks had enough capital to execute the new policy.

If Bank of Ireland needed more capital he would expect private investors would step forward. If Allied Irish Banks or Permanent TSB needed more capital, he said "you'd be asking questions about the people who are running those banks to allow them get into a situation despite Government policy and Central Bank policy that that problem would arise."