KBC blames 'unhelpful' debt relief speculation for high losses
Published 11/11/2011 | 05:00
BELGIAN banking giant KBC has blamed "unhelpful" commentary on debt forgiveness for a dramatic deterioration in its Irish business and has warned that the speculation could have "grave consequences" for the capital in Irish banks.
The comments came as KBC revealed Irish loan loss provisions of close to €100m for the third quarter of the year.
The bank booked €45m of impairments in quarter one and €49m in quarter two, and hoped to contain loan losses at about €50m every three months.
"There is clear evidence of a damaging deterioration in borrower behaviour as a result of unhelpful speculative public commentary concerning the possibility of debt forgiveness," KBC Ireland boss John Reynolds said yesterday.
"Unchecked, this trend has grave consequences for the personal circumstances of those borrowers in distress and for the capital requirements of the Irish banks."
More than 15pc of KBC Ireland's €16bn loan book was in arrears of more than three months at the end of September, up on a figure of 13pc at the end of June.
Mr Reynolds said he expected "a continuing high level of loan provisions" into the fourth quarter, across commercial and home loans.
The higher loan losses pushed KBC Ireland's overall result into the red, as loan loss provisions of €187m more than wiped out net income of €172m.
Despite the grim backdrop, Mr Reynolds insisted the bank "continues to identify opportunities" within the Irish market.
The figures from KBC come after Ulster Bank and Bank of Scotland Ireland both reported higher loan losses for the third quarter.