Irish banks should have taken out insurance on mortgages

Irish banks did not take out mortgage indemnity insurance to protect themselves against losses on their mortgages, which in turn increased the cost to taxpayers of rescuing them, reported Irish Independent.

The Central Bank confirmed this was taken into account when it decided on their capital levels which were announced in September. There are about €148bn of mortgages currently outstanding in Ireland.

It has come to play that foreign home loan providers such as KBC, do have Irish mortgage indemnity insurance, providing some level of protection if losses occur. However most Irish banks do not, though EBS is an exception.

AIB announced they do not have insurance, and Bank of Ireland is thought to be in the same position, although it failed to comment on its “risk management” two days ago.