IBF statement on restoring the health of the banking system

IBF fully acknowledges the actions of Government today to further restore the banking system to health and greatly appreciates the considerable support of taxpayers that is required in this process.

The Irish economy and its people need a fully functioning banking system to help us manage our way through the current financial and economic difficulties and return to growth.  IBF recognises that the banking sector in turn must clearly demonstrate a commitment to all of its stakeholders to rebuild a sector that is well regulated, competitive and customer-focused and that plays a critically positive role in society.

Focus of mainstream lenders remains on forbearance

  • Repossessions remain very low – notwithstanding overall increase in arrears
  • Further decrease in court proceedings for outstanding arrears
  • Early customer engagement is key

The Irish Banking Federation (IBF) welcomes the fact that, although the overall percentage of mortgages in arrears has increased, the level of home repossessions by mainstream lenders remains low.  This continuing trend, evident in the latest arrears statistics published by the Financial Regulator, once again emphasises the importance and value of early, constructive engagement between distressed borrowers and their lenders.

The Financial Regulator’s statistics show that, for the market as a whole, the proportion of mortgages in arrears more than 90 days has increased to 4.61%, while the proportion of mortgages in arrears more than 180 days has increased to 3.14%.  These figures reflect the difficult and uncertain economic and financial situation that many homeowners face.

However, the effectiveness of forbearance in helping people to manage their arrears situation and to stay in their homes is evident from the continuing decline in repossessions and in the number of cases before the courts.

The number of repossessions during Q2 2010 has fallen for the third consecutive quarter to 86 – of which 20 were repossessed on foot of a court order and 66 voluntarily surrendered/abandoned.  And there has been a further decrease in the level of outstanding arrears cases where court proceedings have been issued.

Pat Farrell, IBF Chief Executive states:

“The latest figures from the Financial Regulator confirm that the focus of mainstream lenders remains firmly on forbearance and this is helping homeowners to manage their arrears and to stay in their homes.  IBF mainstream lenders remain committed to doing everything possible to help people with genuine repayment problems; and early, constructive engagement between the borrower and lender is key to this.  IBF member institutions are now working on the implementation of the interim recommendations of the Expert Group on Mortgage Arrears and Personal Debt – including a Mortgage Arrears Resolution Process (MARP) as part of a revised Code of Conduct on Mortgage Arrears.  This will provide further safeguards and reassurance for distressed homeowners.”

The forbearance policies and practices adopted by IBF mainstream banks and building societies continue to help borrowers to work with their lenders in managing their mortgage and other debt repayments.  The results of this are reflected in the comparatively low level of repossessions here compared with the UK as the following graph illustrates.

Repossessions September 2010

Notes

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