Banking Sector Committed to Continued Low Levels of Repossession, says IBF

Comparison with UK demonstrates effectiveness of IBF Code of Practice
All lenders invited to adopt IBF Code
Borrowers in difficulty urged to talk to lenders early

The Irish Banking Federation (IBF) welcomes confirmation today by the Financial Regulator that mortgage lenders have well-established procedures in place for managing arrears and repossessions which clearly show that repossession of a residential property is a last resort. And the IBF is at one with the Regulator in encouraging borrowers who experience difficulty in meeting their mortgage repayments to talk to their lender at the earliest opportunity.

The Regulator’s finding that, in the three and half years between January 2005 and June 2008, a total of 112 residential properties were repossessed by banks and building societies confirms that the level of repossession here is very low by international standards – 32 per year on average. For example, for every 100,000 mortgages issued, three result in repossession in Ireland compared to almost 200 in the UK – demonstrating a significantly different approach to arrears management between the two markets.

The IBF firmly believes that the situation here reflects the fact that banks and building societies subscribe to the IBF Code of Practice on Mortgage Arrears. Under this Code introduced in 2000, lenders agree to adopt flexible procedures for the handling of arrears cases and to assist the borrower as far as possible. The Code makes clear that the lender will not seek repossession of the property until every reasonable effort has been made to agree an alternative repayment schedule. The following are among the key features of the Code:

A commitment to handle genuine cases sympathetically and positively
A willingness to explore, on a case-by-case basis, the suitability of various options that could include changing the amount of the regular repayment, temporary deferral of the repayments, extending the term of the loan, capitalising the arrears and interest.

Details are on the IBF website

“We have full confidence in the effectiveness of this Code of Practice and the figures set out by the Financial Regulator fully support this”, states Pat Farrell, IBF Chief Executive. “We would welcome all lenders subscribing to this Code – not just the banks and building societies. And we would strongly encourage any borrowers who may be experiencing difficulty in meeting their mortgage repayments to engage with their lender at the first opportunity. We know from talking to our own members and from working closely with representatives of the Money Advice and Budgeting Service (MABS) how important it is for early communication between borrower and lender in order to explore the basis for a mutually-acceptable repayment arrangement.”

The IBF and MABS are currently finalising agreement on a new Protocol on Debt Management which is designed to improve the operational effectiveness of engagement between creditor representatives and MABS money advisers on individual cases of consumer debt.

Note to Journalists: The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644 Lisa Shevlin, PR Executive, IBF,

IBF Statement of Government Recapitalisation Plan

IBF notes last night’s (14th December) statement from Government setting out its approach in relation to the recapitalisation of credit institutions. The next stage of the process requires individual institutions to reflect on these proposals and respond directly to Government. Pending the completion of that process IBF will not be making any further comment on the matter

Banks’ support for businesses to continue, says IBF

The Irish Banking Federation (IBF) today underlined the commitment of the banking sector to continue providing strong support to business generally, and to the Small and Medium Enterprise (SME) sector in particular, in the current economic slowdown.

IBF is engaging with SMEs, their representative bodies and member bank institutions, actively monitoring the challenges currently faced by many businesses and facilitating supportive responses by members within a competitive banking environment. IBF is confident that various new initiatives being introduced by lenders are gaining momentum and that they will have a beneficial effect across the business sector over the coming weeks and months. However, IBF stresses that such initiatives on their own will not be a panacea for the many challenges facing businesses and the wider economy at this time.

“The banking sector will not be found wanting in providing increased support for its business customers in these very challenging times”, states Pat Farrell, IBF Chief Executive. “Access to working capital and term finance is of fundamental importance to all businesses and to SMEs in particular. However, it is only one of a number of significant challenges facing businesses today, alongside sharply reduced consumer spending, increased pressure on margins and delays in debtor payments.”

IBF-member institutions continue to offer a range of competitive offerings complemented by a range of non-financial advisory and mentoring support services focused on the SME sector. “IBF will continue to maintain close contact with the appropriate SME representative bodies and keep the situation under review”, according to Pat Farrell.

Note to Journalists 
The Irish Banking Federation (IBF) is the leading representative body for the banking and financial services sector in Ireland, representing over 70 member institutions and associates, including licensed domestic and foreign banks and institutions operating in the financial marketplace here.

Further Information: 
Felix O’Regan, Head of PR and Public Affairs, IBF, tel. 6715311, 087 6481644
Lisa Shevlin, PR Executive, IBF, tel. 6715311