Supporting the SME Sector

The Irish Banking Federation (IBF) believes that a number of recommendations in the fourth quarterly report of the Credit Review Office published today merit consideration.

These relate specifically to John Trethowan’s recommendation for Government to examine ways in which assistance can be given to SMEs to allow them to better establish their current and future viability; also his recommendation for research on SME credit supply and demand to be jointly commissioned by the relevant Government Departments, business and banking representative groups such that the results would command universal acceptance.

IBF would be happy to work further with other stakeholders in these important areas.  IBF has   previously formulated outline proposals regarding a form of ‘examinership light’ – a fast track process designed to recapitalise potentially viable SMEs and thereby protect employment; and IBF facilitated banks’ participation in the Government-commissioned Reviews of SME Lending independently produced by Mazars.

IBF also notes the Credit Review Office’s finding that the loan approval rates (in respect of the banks covered) stand at around 88% and remain in line with the findings of the three previous reports undertaken by Mazars.

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.

IBF Statement in Response to Publication of the Nyberg Report

The Irish Banking Federation (IBF) has noted the publication by Government of the report of the Nyberg Commission.  The report points to shortcomings, mistakes and failures on the part of many of the key players in the economy – including banks, regulators and Government, among others.  The consequences of this collective failure have been well documented and the IBF has fully acknowledged the banking sector’s role in this and its full appreciation of the support of Irish taxpayers.  The shortcomings identified are being addressed through the process of bank restructuring and recapitalisation, regulatory reform, overhaul of corporate governance, statutory consumer codes and other measures.  IBF and its member banks are engaging constructively with that process.

Focus of Mainstream Lenders Remains on Forbearance and on Reform of the Debt Enforcement System

The Irish Banking Federation (IBF) notes from today’s Central Bank statistics on mortgage arrears that, although the overall percentage of mortgages more than 90 days in arrears has increased to 6.3%, the level of home repossessions remains low – and this is particularly true of mainstream lenders.

The statistics also indicate that through engagement with their customers, adherence to the statutory Code of Conduct on Mortgage Arrears and the IBF/MABS Protocol on Debt Management – which IBF put in place with the Money Advice and Budgeting Service – IBF members are doing everything possible to keep borrowers in their homes.  This is reflected in the 62,936 restructured mortgages now in place and in the comparatively low level of house repossessions here – 18 per 100,000 compared to 81 per 100,000 in the UK, for example.

IBF strongly encourages borrowers who are under pressure with their repayments to communicate with their lenders in order to find a workable arrangement that will assist in the management of their financial difficulties and help to avoid repossession.

In relation to much-needed reform of the debt enforcement system – the thrust of which IBF supports – the banking sector’s focus will continue to be on the recent, comprehensive recommendations of the Law Reform Commission.

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.

Mortgage Market Activity Remains Subdued

  • 3,259 new mortgages issued in Q1 2011 to a value of €577 million
  • Home purchasers continue to dominate the market

The IBF/PwC Mortgage Market Profile published today shows that 3,259 new mortgages to the value of €577 million were issued during the first quarter of 2011.

The volume of new lending is down 42% compared to the previous quarter and is down 53.1% on the previous year.  While the seasonal pattern of mortgage lending typically results in a lower level of lending in the first three months of the year compared to other quarters, this more pronounced reduction in activity reflects the broader macroeconomic environment.

However, the key home purchaser segments of the market, First Time Buyers and Mover Purchasers, continue to dominate this smaller market.  Together they now account for over 77% of the market by value and 67% by volume.  In effect, more than three-quarters of all mortgage credit issued now goes to the home purchasing segments of the market.

Lenders generally continue to report subdued underlying demand for new mortgage finance.  This has been influenced by uncertainty around macroeconomic developments, property price trends and future interest rate movements.  At the same time, lenders continue to point to the need for prudent lending with the all-important focus on the borrower’s employment situation and capacity to repay.

Commenting on the data, IBF Chief Executive, Pat Farrell, stated:

“The economic situation remains challenging and prudence remains the order of the day.  For customers that means manageable borrowing and for financial institutions it means prudent lending.”

The IBF/PwC Mortgage Market Profile can be viewed on the IBF website here.

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.

IBF Statement in Response to Comments from the Master of the High Court

Banks are assisting distressed borrowers

The member banks and building societies of the Irish Banking Federation (IBF) continue to work diligently with borrowers who are under pressure in meeting their repayments.

Through engagement with their customers, adherence to the statutory the Code of Conduct on Mortgage Arrears and following the IBF/MABS Protocol on Debt Management – which IBF put in place with the Money Advice and Budgeting Service – IBF members are doing everything possible to keep cases out of the courts system.  This is reflected in the 59,000 restructured mortgages now in place and in the comparatively low level of house repossessions here – 13 per 100,000 compared to 69 per 100,000 in the UK, for example.

In relation to reform of the debt enforcement system – which IBF supports in principle – the banking sector’s focus will continue to be on the recent, comprehensive recommendations of the Law Reform Commission.