Patrick Honohan addresses the Chartered Accountants Ireland

Dreaded_Estate

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RT.ie Extra Video - RT News Player


Some quotes taken from Alphaville
http://ftalphaville.ft.com/blog/2010/11/23/413611/patrick-honohan-is-an-honest-guy-redux/

I have already railed elsewhere against the backward-looking loan-loss provisioning practices encouraged by International Financial Reporting Standards (IFRS) and still all too pervasive in the reporting by most of the Irish banks. I find it unsatisfactory that expected losses in many parts of the portfolio are clearly higher than the provisions already taken, because I fear that this evident and in some cases explicit discrepancy may awaken doubts in the minds of investors as to the relevance of other aspects of the reported accounts
There is a lot of information that could be provided. For instance, for the residential mortgage book, which has been much discussed recently, one could imagine much more extensive disclosures about the size distribution, broken down into a variety of sectoral and other classifications. Information on the aging and migration of loans between different performance buckets would also help. Bottom line: the banks might do well to call in the leading credit analysts and find out what information would be of greatest use to them in identifying and quantifying tail risks. And then provide it
 


Libero

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Patrick Honohan said:
Bottom line: the banks might do well to call in the leading credit analysts and find out what information would be of greatest use to them in identifying and quantifying tail risks. And then provide it.
This statement leaves me with two questions in my head.

1: What does Patrick think should happen next if the answer is a figure that can't be afforded by the banks or the state?

2: What does he think is the point of the Governor of the Central Bank (i.e. him) gently suggesting "the banks might do well to call in the leading credit experts..."? Have Irish banks shown any previous enthusiasm for having outsiders (PWC excluded) poke around their loan books to quantify likely future losses? Might this mild suggestion actually be something (subject to question 1 above) the CBFSAI might have to insist on?

(Yes, question 2 is three questions in one!)
 


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