Tuesday 25 July 2017

Institutions working out their issues but future is far from safe

Restructuring

Laura Noonan

Laura Noonan

"WE'RE not there yet, but we're getting there."

A few weeks out from the third anniversary of the bank-guarantee scheme, with a mind-boggling €60bn of our cash pumped into battered institutions, the public deserves more than a tired Irish Rail slogan.

Unfortunately, it doesn't look like we're going to get it soon.

Talking to those on all sides of the banking crisis, a single message shines through -- it takes a lot longer to build up a banking sector than it does to destroy it.

"The nature of the restructuring is enormous," says one source, "to expect a relatively quick turnaround is unrealistic."

Over the past week, the Irish Independent has probed the main banking problems.

Some of what we found is encouraging, with banks making definite strides; some is most definitely not, with progress falling behind on key issues and new issues emerging.

Let's start with the positives.

The banks are (almost) all in very different places than they were a few years ago, the cultures have (mostly) been overhauled and there's a real determination to do right by the taxpayer. Mortgages debt is being waived for the most troubled borrowers, albeit on a limited basis.

Negative equity

Negative-equity mortgages, which allow those in negative equity to transfer it to a new property, are being advanced on a limited basis.

It's not all good news, though.

As Central Bank governor Patrick Honohan pointed out last week, while banks were invoking new ways to deal with troubled loans, the response was "behind the curve".

As highlighted by the Irish Independent, borrowers in identical situations could find themselves pursued by a receiver, freed of debt or allowed to roll up interest -- depending on who they banked with.

The lack of transparency around these debt-settlement arrangements and negative equity mortgages could be the start of a brand new problem.

Then, there's the issue of new lending. Despite training staff and bringing in experts from the likes of Enterprise Ireland, banks still have a way to go in gaining the confidence and competence to carry out the lending that Ireland so desperately needs.

It's not surprising then that there's still an uphill battle to repair relations with a business community that sees the banking sector as unwilling and unable to meet its needs.

Irish Independent

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