increased market uncertainty in the euro area and worldwide continue to present challenges to accurate loan - loss forecasting. furthermore, the continuing dislocation – to date – in the transmission of monetary policy throughout the euro area presents banks in stressed countries like ireland with profitability challenges, especially in respect of tracker mortgages ( whose running yield is tied to the ecb policy rate ). since march 2011, economic conditions ( both in ireland and in ireland ’ s main international trading partners ) have generally been worse than the base case employed in pcar2011, but rather better than the stress case. of course in the coming years the implementation of basel 3 will also lead to higher capital ratios. the aim must be to have the banks return to sufficient profitability in a stable overall the deleveraging losses are the highest component. partly this reflects the unavoidable discount that would be incurred by a seller of opaque loan contracts ( even if “ firesale ” conditions do not prevail ), partly reflecting the informational disadvantage of likely purchasers. note, however, that this figure should be interpreted with caution inasmuch as prospective hold - to - maturity losses on the assets to be deleveraged were not separately evaluated. as such the loss shown on deleverage overstates the cost actually incurred by having to dispose of assets rather than holding to maturity. bis central bankers ’ speeches environment so that additional needed capital in future years can come from investors other than the state. instruments used just as with the previous capital increases, the going concern banks worked to reach the objectives as far as they could by liability management exercises and the sale of non - core assets. in the case of bank of ireland, some new cash was raised from issuance of equity. when a government recapitalises a bank, it generally provides an asset to the bank in return for the acquisition of a capital claim on the bank. as things have worked out, to a first approximation, the irish government ’ s practice has been to inject cash into going concern banks ( aib, bank of ireland, ilp ), and non - marketable promissory notes into the entities now being wound down ( ibrc, formed from the former anglo and inbs ). the cash was sourced either from the national pension reserve fund, a sovereign wealth fund established by the irish government in the late 1990s at a time of fiscal strength, or directly from the exchequer. the promissory notes represented a besp

r basant roi : improving loans quality in mauritius address by mr r basant roi, governor of the bank of mauritius, at the opening of ioib branch, curepipe, 25 may 2006. * * * hon. deputy prime minister and minister of finance and economic development chairman of the board of directors and chief executive of ioib ladies and gentlemen good afternoon i am extremely happy to be here with you on this special occasion marking the opening of the curepipe branch of the ioib. may i, to begin with, express my personal appreciation to the board of directors of the ioib and the sbi team for having successfully met the various challenges that confronted them at the time of the take over of the bank last year. the new management of the bank was faced with the task of putting in place a robust policy framework including solid internal control systems and procedures and filling gaps in the overall management structure of the bank. declining level of deposits, advances and profitability, skewed asset level with low yielding investments accounting for more than 60 per cent of the asset book, high cost of funds with fixed deposits accounting for over 65 per cent of total deposits, absence of investment friendly products, extremely high level of non - performing assets and total absence of any system of target setting and performance review. these were conditions in which the bank was operating in the very recent past. worst, a constellation of obscure forces, known only to a few, militated against those who were really determined to bring the bank to safe haven. the regulator and a few faithful board members of the bank sailed against the strong wind. i am personally very happy to see that the board of directors of the bank and the sbi team have brought about a dramatic improvement in the balance sheet of the bank in the first year of its operation. on an annual basis, the deposit base of the bank grew by 21 per cent, advances by 55 per cent and its total assets by 50 per cent. profit before tax rs34 million ; profit after tax rs24 million. the ratio of gross npa to gross advances fell from nearly 27 per cent in june 2005 to nearly 17 per cent in march 2006 – that is, by 10 percentage points. the ratio of net npa to net advances has fallen from 16 per cent to 9 per cent and is expected to go down to around 3 per cent by march 2007. without an iota of doubt, this is really an impressive performance. i have found it appropriate to mention these figures for