In a series of pointed remarks, Central Bank director of credit institutions supervision Ed Sibley warned that Ireland must, at all costs, remember the lessons learned since 2008 but added that he feared they are already being forgotten.

He further admonished Irish banks for failing to meet targets set by the Central Bank, as well as for showing signs of returning to a toxic culture of bad lending and dragging their feet in finding solutions for thousands of mortgage holders in arrears.

“We must not forget the lessons from the bubble and the more recent past, such that we never again have such a catastrophic and systemic failure of lending standards and practices. Some memories do appear to be surprisingly short, both within the banks and outside them,” said Mr Sibley.

“We have already seen some evidence of a return of more aggressive lending practices and cultures, and issues with risk appetites, the pricing of loans relative to risks and the effectiveness of board oversight over new lending. We forget the lessons from this crisis at our peril. All of our actions need to both address the legacy of the crisis and mitigate and reduce the risk of recurrence.”

With non-performing loans (NPLs), or those in arrears, still accounting for a fifth of lenders’ loan books, despite significant improvements in recent years, the “blight” of banks’ poor lending practices still remains.

Some 43,000 owner- occupier mortgages are in arrears of 90 days or more.

Mr Sibley said that the €45bn of non-performing loans cause “untold distress” to borrowers and lead to “significant societal implications”.

“Eight years after the infamous night of the guarantee, nearly seven years after the establishment of Nama, and the subsequent transfer of €74bn of loans, after billions of euros of loans have been restructured and dozens of portfolios sold, there still remains €45bn of non-performing loans on the retail banks’ balance sheets,” said Mr Sibley. “The challenge is still significant.”

Addressing an audience of bankers at a gathering of the Banking and Payments Federation of Ireland in Dublin, Mr Sibley accused the banks of continuing to frustrate efforts to resolve the tens of thousands of outstanding bad loans.

Mr Sibley said individual banks may be inclined to drag their feet on finding solutions in the hope of a “miraculous” recovery in borrowers’ circumstances.

“From an individual lender perspective, there may be incentives to act more slowly,” he said. “For example, lenders may hope that underlying collateral values increase, or that borrowers’ circumstances miraculously improve beyond what can be reasonably expected.

“Undoubtedly, these incentives and factors were relevant in the history of NPLs in Ireland, [that’s] why the Central Bank has had to be so interventionist in driving resolution. My fear is that they are still at play today, albeit to a lesser extent.”

Of the 43,000 non-performing owner-occupier mortgages, no effort has been made to resolve a fifth of them, he added.

Mr Sibley further admonished the country’s banks for failing to meet mortgage resolution targets set by the Central Bank under its Mortgage Arrears Resolution Targets.

“To be forthright,” Mr Sibley said, “performance was disappointing with most banks falling significantly short of our expectations.”

On a more positive note, the Central Bank official said the number of non- performing loans has been falling since their peak in late 2013 and have halved since that time.

NPLs to SMEs and other businesses reduced by 54% since the start of 2015 with owner-occupier mortgages in arrears down 27% during that period.