The deputy governor of the Central Bank has described as "legitimate and necessary" the sell-off of distressed loans by Irish banks.
Ed Sibley said the continued high level of non-performing loans made the banks highly vulnerable to future economic shocks.
“Portfolio sales are a legitimate and necessary approach for banks to use to address non-performing mortgage loans,” he said in a speech to the Institute of Banking.
"While all the Irish retail banks are significantly better capitalised than pre-2008, they are more vulnerable than those without this legacy to future economic shocks," Mr Sibley said.
Ulster Bank, Permanent TSB and AIB are planning to sell-off billions of euros of non-performing loans to third-party funds in the coming months.
However, there is concern that the potential owners of these portfolios will not be directly regulated by the Central Bank.
However, Mr Sibley said the Central Bank has ensured that the consumer protections, including the code of conduct on mortgage arrears, travel with the loans.
