IBF Supports Reform of the Debt Enforcement Process

The Irish Banking Federation (IBF) welcomes the publication today of the Law Reform Commission’s (LRC) report on personal debt management and debt enforcement and supports key recommendations in that report.

While the detail of all of the LRC’s recommendations will need to be closely examined and their implications carefully considered, the IBF supports the broad thrust of reform as follows:

  • Reform of the judicial bankruptcy system

The IBF believes that the current system is outdated and, as a result, has become ineffective.  IBF has long supported the case for an effective alternative to imprisonment for those who are unable to pay fines and civil debt.

  • Development of non-judicial debt settlement arrangements to complement current practices

The IBF/MABS Protocol on Debt Management has been very effective in enabling IBF creditors and MABS money advisers to work together effectively to help personal customers/clients to address and manage debt problems and, using an agreed steps procedure, wherever possible, to formulate a mutually-acceptable, affordable and sustainable repayment plan.  A copy of the IBF/MABS Operational Protocol: Working Together to Manage Debt is available here.

  • Use of a Standardised Financial Statement

IBF supports the concept of a Standardised Financial Statement (SFS) and recognises the importance to effective debt management of clear, reliable customer information (including assets).   IBF is currently working with MABS, the Central Bank and other parties to agree the most appropriate elements of an SFS.

  • Regulation of debt collection agencies and of commercial debt advice agencies

The IBF believes that it is in the interests of both creditors and debtors to have sound practices ensured through effective regulation.

IBF’s Chief Executive, Pat Farrell, states: “These recommendations will need to be considered hand-in-hand with the recent recommendations of the Expert Review Group on Mortgage Arrears and Personal Debt, with the revised Central Bank Code of Conduct on Mortgage Arrears and with the ongoing consultation on a revised Consumer Protection Code.  Notwithstanding the significant challenge that all of this presents, our sector remains fully committed to working with and supporting customers under pressure with their repayments.”

The IBF and member institutions are currently working constructively with the Central Bank, MABS and other stakeholders to address the wide and important range of matters raised in the LRC’s recommendations.

Note:  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

Banks Committed to Supporting Viable SMEs through these Challenging Times

Publication today by the Central Bank of statistics on SME lending is welcome in confirming the extent and importance of the bank/SME relationship in the economy.

The €33 billion that is shown to be currently outstanding from banks in core SME loans (excluding property-related activity and financial intermediation services) clearly illustrates both the resilience of the SME sector and ongoing support from banks for the sector through these challenging times.

Lending to Irish SMEs
Average (Q1-Q3 2010)
Outstanding Lending (€,bn)
Core SMEs* 33.3
of which:   overdrafts* 2.8
All SMEs 69.3
Gross new lending (€, m)
Core SMEs* 712
All SMEs 1,013

*Excluding property-related sectors and financial intermediation

Source:  Central Bank of Ireland

A closer examination of the recent trend in SME lending gives rise to a number of important observations as follows:

  • As stated by the Central Bank, repayments on SME loans have been greater than drawdowns.  This suggests that SMEs are themselves reducing their level of outstanding borrowings; and this is supported by anecdotal reports from within the banking sector.
  • The trend reflects reduced demand from SMEs for credit.  This is confirmed by the Central Bank’s most recent (Oct’10) Euro Area Bank Lending Survey in which lenders report continually declining demand over the first nine months of 2010 – although the first signs of stabilisation in demand are evident in the 4th quarter of this year.  This factor is also referred to in the most recent (Nov’10) report from the independent Credit Review Office which states: “We are approaching a tipping point whereby the issue is moving from being a supply side problem to a demand side issue” – because of factors such as improved cashflow management, trimmed discretionary costs and deferred investment decisions on the part of SMEs.
  • The Central Bank notes evidence that institutions are attempting to actively grow their core SME loan book.

Commenting on the Central Bank data, IBF’s Chief Executive, Pat Farrell, stated:

“Banks remain fully committed to supporting viable businesses and the Central Bank data is a clear reflection of that.  Furthermore, up to €14 billion in SME funding for new or increased credit facilities is being made available through 2010-11.  These funding initiatives are complemented by a range of non-financial advisory and mentoring support services.  We would encourage all SMEs requiring credit to apply to their bank and to provide the relevant supporting documentation required by the lender to make an informed decision.”

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

Banks Committed to Supporting Viable SMEs through these Challenging Times

Publication today by the Central Bank of statistics on SME lending is welcome in confirming the extent and importance of the bank/SME relationship in the economy.

The €33 billion that is shown to be currently outstanding from banks in core SME loans (excluding property-related activity and financial intermediation services) clearly illustrates both the resilience of the SME sector and ongoing support from banks for the sector through these challenging times.