Third of loans go bad at bank that lent €32m to shopkeeper
Published 26/01/2011 | 05:00
The Swiss bank that lent a Co Monaghan shopkeeper €32m for a shopping centre has seen almost a third of all its loans go bad after going on a lending spree in Ireland.
The role of Zurich Bank in the Irish property bubble was not widely known before, but figures show that 32pc of all its loans are either in arrears or need extra monitoring.
The bank, which is headquartered in the IFSC, backed several hotels in Ireland and also gave a loan to the private members' club in Dublin, Residence, run by entrepreneur brothers Simon and Christian Stokes.
Property-related losses at Zurich hit stg£145m (€167m) in its last set of accounts as it paid a price for backing so many property projects here.
This week, the Commercial Court heard that Zurich gave shopkeeper Jim McConnon a loan even though he had no previous development experience.
Mr McConnon is expected to outline to the Commercial Court next week how he was app- roached by several lenders to develop the shopping centre.
His lawyers claimed there were issues as to how it came about that Zurich approached him, and not vice versa.
Documents lodged at the Register of Deeds show that Mr McConnon bought his modest semi-detached home in Catleblayney in 2002 and mortgaged several properties in the years leading up to his 2007 loan from Zurich, the scale of which has shocked local residents.
Last night, the mayor of Castleblayney Town Council, David Funcheon, said he believed Zurich had questions to answer, as two shopping centres opened across from each other in the town in a year.
"It could be argued there was reckless lending on the part of the bank," he added.