The Irish Independent reports that Ireland and Portugal should get seven more years to repay loans from the EU to facilitate their return to full market financing, a recommendation from international lenders to EU policy-makers says.

Such a move, if accepted, would mark a significant concession to Ireland, helping to seal its return to normal borrowing on markets as well as offering a significant boost to Portugal as it struggles to push through spending cuts.

Ireland and Portugal received emergency loans from the EU in 2010 and 2011 respectively after investors refused to lend to them at sustainable prices.

The average maturity on Ireland's EU loans stands at about 12 years. By extending the maturity, the payments are spread over a longer time, reducing the burden on the countries.

But Ireland will need to roll-over around €20bn a year in 2016-2020 while Portugal will need the same amount per year between 2015 and 2021, a paper prepared for junior EU finance ministers and central bankers said.

The paper was drafted by representatives of the European Central Bank, the European Commission, the International Monetary Fund – the troika – and the European Financial Stability Facility (EFSF).

It will be presented to EU ministers who meet in Dublin on Friday and Saturday to discuss the extensions.

Finance Minister Michael Noonan said in Limerick last weekend that no decision will be taken this weekend at the finance ministers' meeting.

Because the meeting is described as informal, the ministers are likely to give only political support for the extensions for both countries, with a formal decision to follow only later next month.

But while Ireland is likely to get full support, the backing for more time for Portugal is likely to be made conditional on Lisbon finding new measures to fill a €1.3bn gap in the 2013 budget following a ruling by Portugal's constitutional court that some of the earlier planned steps were illegal.

"That is the maximum one can expect," said one senior Eurozone official involved in the preparations for the meeting.

While much of the debt that falls due between 2015 and 2022 for Portugal and Ireland is privately owned, it also includes IMF and EU loans.

Data on websites of the EFSF and the EU bailout fund, ESFM, shows that redemptions of EU loans account for €8.6bn in 2016 for Ireland, and almost €7bn in 2016 and €8.7bn in 2021 for Portugal.

Dublin and Lisbon have therefore asked EU ministers to extend the average maturity of the loans by 15 years since the EU redemptions would have to be financed by market borrowing.

The paper considered extensions of two-and-a-half, five, seven and 10 years and more, rejecting the shorter extensions as not beneficial enough for the two countries.

The Irish Independent also reports that plans to solve the mortgage crisis won't work, a new report warns.

It comes as the Government's attempts to deal with the mess received a separate blow with the announcement that financial regulator and Central Bank deputy governor Matthew Elderfield is to step down in six months' time.

The report from the Money Advice and Budgeting Service (MABS) finds the typical struggling homeowner in arrears is older than many experts previously thought, casting doubt on the official split mortgage plan to tackle the crisis.

It finds that the majority of people in mortgage distress are aged between 41 and 65.

Experts said this was a new and explosive revelation and contradicted perceived wisdom that most of those in arrears are in their 30s.

Regulators and the Department of Finance are hoping that most of the almost 100,000 distressed borrowers will be offered split mortgages.

This is where the mortgage is divided, with repayments made on the main part of the mortgage and the other part "parked" and dealt with later.

But the report on mortgage arrears, a copy of which has been seen by the Irish Independent, casts serious doubts on whether this will work.

The report, commissioned by the Department of Social Protection, examines almost 6,000 mortgage arrears cases dealt with by MABS offices.

Most of those who go to MABS because of mortgage difficulties are at an age when they should be nearing the end of their mortgage. However, they topped up their home loans during the boom, which has left them deep in debt.

According to the report, solutions "such as debt warehousing/split mortgages will not provide relief to many MABS clients in mortgage difficulty".

Instead, banks would be better off taking the mortgage and other debt together and writing down a portion of it to a level the borrower can afford to pay.

The report also finds it is taking banks two months to reply to distressed borrowers with offers to deal with their situation. It calls for the Central Bank to take action to deal with the delays.

Lenders are also criticised for offering arrangements to borrowers that they have no hope of meeting. This is because the repayments are set too high.

The banks are accused of offering solutions to those in arrears which focus on the mortgage debt only and ignore other borrowings.

Targets

Finance Minister Michael Noonan and Mr Elderfield last month told six banks to meet targets for the number of mortgages that are more than 90 days in arrears, forcing them to make offers that last more than a few months.

At least half of those with residential and buy-to-let mortgages at AIB/EBS, Bank of Ireland/ICS, Ulster Bank, Permanent TSB, KBC Bank and ACC will have an offer of a long-term restructuring.

The report finds that 16pc of its clients in mortgage trouble owe between €20,000 and €30,000 in secondary debts.

And 19pc owe more than €50,000 on credit cards, personal loans and credit union loans, according to the state-funded MABS which operates through 63 offices around the country.

'MABS Clients and Mortgage Arrears', by Collette Bennett, is due to be published in a few days.

The Irish Times reports that just over three years into a five-year contract, Matthew Elderfield (47) surprised everyone in the financial sector yesterday by declaring his intention to leave the Central Bank in October and return to the UK.

While nobody thought that the Englishman would spend the rest of his career here, there was genuine surprise at the timing of his announcement.

It was only four weeks ago that Elderfield shared a platform with Minister for Finance Michael Noonan to announce performance targets for lenders designed to deal once and for all with mortgage arrears.

There was no detail provided on what “other interests” he might be pursuing but the speculation suggested a move into the private sector rather than another role in financial regulation or supervision.

Clue
The clue is in the line that says he will “step away with immediate effect from involvement in supervisory and other issues if and where a conflict could be perceived”.

There’s no doubt that Elderfield has worked hard during his relatively short spell here and greatly enhanced his CV from his time on Dame Street.

But how should we rate his contribution to resolving the financial crisis in Ireland over the past three years and restoring the credibility of the regulator?

Elderfield came to Ireland at a time when the reputation of the country’s financial sector was in tatters after years of lax regulation. He made no secret of the fact that he felt the Central Bank was under-resourced and lacked sufficient skills in certain key areas to tackle the crisis that was unfolding. He also argued for greater powers of enforcement.

Elderfield made his mark early on by appointing administrators to Quinn Insurance Ltd at the end of March 2010 over concerns about its solvency ratios. This set in train a series of events that ultimately led to the collapse of Sean Quinn’s business empire.

It was a gutsy move and Elderfield remained resolute in the face of enormous pressure from various quarters.

His “show me the money and we will take a different approach” quote in response to claims by Sean Quinn that he could sort out the issues around the insurer was particularly memorable. Nothing that has happened since with the Quinns suggests that Elderfield’s move was unjustified.

Elderfield is also credited with implementing rigorous stress tests on the banks a couple of years ago.

On the flip side, some would argue that the Central Bank has been a tad heavy-handed in the raft of fines it has issued to various investment advisers for what are perceived as relatively minor breaches of rules.

Those involved in the IFSC also claim they are over-burdened by regulations that are more suitable to high street banks rather than the specialist work they undertake.

In response, Elderfield might point to the collapse of Depfa Bank in the IFSC as justification for imposing rigorous regulation. It might also be argued that the regulator dropped the ball in relation to the collapses of Custom House Capital and Bloxham Stockbrokers.

Arrears
And there are many who feel that it has taken too long to get to grips with the mortgage arrears issue. We’re five years into the financial crisis and our banks still haven’t faced up to this major problem.

At the end of December, 94,488 private residential mortgage accounts were in arrears of 90 days or more. That’s 11.9 per cent of the total. Another 28,421 buy-to-let properties are in arrears of three months or more.

To date, the banks have been content to kick the can down the road.

The regulator said the new targets will be backed by “rigorous new provisioning standards” and the “possible” imposition of higher capital requirements.

Having finally set the ball in motion to deal with the arrears crisis, Elderfield’s departure is hardly helpful to its implementation and it will pass to his successor to get it over the line.

Noonan said Elderfield was leaving at a time when “normality” is returning to the financial system. He might have added that the Englishman has helped to restore the reputation of the regulator.

These might ultimately prove to be Elderfield’s legacy here.

The Irish Times also reports that  Sir James Crosby must be given some credit for volunteering to forgo a chunk of his lucrative HBOS pension and, in an unprecedented move yesterday, surrendering his knighthood. His actions are in stark contrast to those of “Fred the Shred”, the former RBS banker who was stripped of his knighthood in 2012 and gave up part of his even more lucrative pension only after public and political pressure.

But that’s about as far as Crosby’s credit goes. His decision comes just a week after an excoriating report into HBOS branded him one of the primary architects of the doomed bank’s downfall, along with former chairman Lord Stevenson and another former chief executive, Andy Hornby.

Publication of the damning report – An Accident Waiting to Happen – came five years after the collapse of the bank but the parliamentary commission on banking standards made it clear that, even without the global financial crisis, HBOS would have gone bankrupt, a victim of its high-risk strategy and incompetent, reckless, delusional management.

Using some of the hardest-hitting language ever seen in a parliamentary report, the commission talked of the “colossal failure” of the bank, created in 2001 through the over-ambitious merger of Halifax and Bank of Scotland. At the time, the combined company was worth £30 billion but, said conservative MP Andrew Tyrie, who heads the commission: “The sums would never have added up.” In 2008, the bank was bailed out with more than £20 billion of taxpayers’ money, necessary to prevent its complete collapse.

‘Deeply sorry’
Knighted for “services to the financial sector” in 2006, shortly after he left HBOS, Crosby said yesterday he was “deeply sorry. His knighthood had been “an enormous honour” but he believed it was right he ask the authorities “to take the necessary steps for its removal”.

Also being removed – again, voluntarily – is a near one-third chunk of Crosby’s £580,000-a-year pension entitlement, taking it down to £403,000 per annum. The former HBOS boss indicated that it had yet to be decided whether the amount waived should go to support good causes or benefit shareholders.

That will still leave Crosby, who sold the bulk of his shares in the bank before the financial crisis struck, with an index-linked pension of £406,000, rather more than Fred Goodwin, who is rubbing by on £342,500. That is slightly less than half Goodwin’s original £700,000, following his reluctant decision to surrender £200,000 of it after he took out a lump sum of £2.8 million, which reduced the £700,000 to £555,000 a year).

Crosby has quit his position as an advisor to the private equity firm Bridgepoint, stepping aside last Friday, and has also given up his voluntary role as a trustee of Cancer Research UK, as well as his place on the board of the catering firm Compass. Following the report last week, the board of the FTSE 100 company had notably failed to give him any public backing - unlike his fellow architect of failure, Andy Hornby, who received a glowing statement of support from his current employers, the casinos company Gala Coral. Their chief executive was “doing a great job” and has the complete backing of the business, the company said.

Part-time role
Former HBOS chairman Lord Stevenson, meanwhile, remains a peer of the realm and has yet to break his silence in the wake of the report. He enraged MPs on the banking commission by claiming during hearings that he was not at fault because his role at the bank was only part-time. Stevenson remains on the board of books retailer Waterstones, and is a director of private equity firm Manocap.

The business secretary, Vince Cable, is looking at whether Crosby, Stevenson and Hornby can be banned as company directors for life. So far, only one HBOS executive, Bank of Scotland’s former head of commercial lending, Peter Cummings, has faced sanctions in the wake of the affair. He was fined £500,000 last year and banned for life from working in the City but complained of being scapegoated.

Crosby’s request to surrender his knighthood will now be considered by what’s known as the honours forfeiture committee, led by the head of the civil service and made up of Whitehall mandarins. It is unlikely to take them long to decide.

The Irish Examiner reports that one of the least optimistic economic forecasters has become slightly less pessimistic about the Irish economy’s prospects, upping its outlook for 2013 GDP growth by nearly half a percent.

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