Banks couldn't tell when borrowers were unable make repayments, inquiry hears

Accounting rules for banks made it difficult to tell exactly how many borrowers were having trouble repaying loans.

Banks couldn't tell when borrowers were unable make repayments, inquiry hears

Accounting rules for banks made it difficult to tell exactly how many borrowers were having trouble repaying loans.

The Banking Inquiry has been told that banks had the same kind of accounting rules as other companies, which should not be the case.

UCD professor Eamonn Walsh says the rules meant banks often did not realise that their borrowers could be facing financial trouble.

Mr Walsh said: "We could make a loan to somebody and we could agree with that person that they don’t need to pay us any interest for five years.

"During the life of that loan for five years we will buck interest every month, as if we had received cash from the customer and we will also be able to say that this loan is continuing to perform, because we are receiving the cash from the customer."

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