Recession stories: taking an unfair share of the pain
Jerome Reilly meets a couple nursing heavy losses after they banked on a risky pension plan
COUNTING THE COST: Entire life savings, built up over 30 years of toil, could be wiped out for one couple. Photo: posed by models
They don't feel comfortable talking about how their personal finances have been wrecked in just 18 months and they know many people are so much worse off.
They both work in one of the big two banks and so far their jobs are as secure as they can be in these turbulent times.
She is in her late 40s and he is in his early 50s. They have a very modest mortgage on a comfortable family home that, despite the downturn, is still worth many times the price they bought it for.
At the time they were appointed junior bank officials they were considered lucky.
In the last days of the Seventies, there were literally no jobs. Only the banks were hiring and competition was fierce. Although the banks chanted the mantra of "canvassing will disqualify" during their recruitment drives, it was considered that "a bit of pull" was needed to get a job in the bank.
TDs spent their weekend writing glowing references for Leaving Cert students they had never met after being pestered by their parents.
The banks attracted some of the best and brightest and it was the only work out there, but for a few golden jobs as junior executives in the civil service. If you failed to get either of those coveted positions, the choices were stark -- the B+I ferry, a flight out of Shannon or off to college to hide for four years in the hope the economy would pick up.
The bank has been good to them. It's where they first met and fell in love. The bank provided them with a rock bottom interest rate on their first mortgage which made them the envy of their friends in the late Eighties and Nineties when normal interest rates climbed to an eye-watering 16 per cent. The only downside was that the mortgage had to be paid off in 15 years, so things were tight .
They rose steadily, if unspectacularly, through the ranks and though Irish branch banking became an increasingly cut-throat working environment, with greater pressure to produce sales, they stayed; and when children arrived, she kept working despite a lengthy commute.
Despite working in financial services, they probably could have gone through life without ever owning a share.
But throughout the Eighties the bank were paying bonuses to staff who performed well. Staff could either take cash or else take the far more tax-efficient route and convert the bonus into shares at a price below the market price. Other schemes followed.
Bank officials could also convert part of their ordinary wages into shares. It was considered a way of saving. Both husband and wife took their share options every year and their dividends rolled over into additional shares.
While many of their friends were dabbling in second properties for rent or buying a holiday home in the Algarve, they focused their spare cash on the children, music lessons, exchange programmes to France and Italy, and family holidays. They both loved golf which provided their main social outlet.
The vast majority of their savings remained in shares in the bank they worked for. About three years ago, her father died and there was the legacy of a large family home.
It was sold at the height of the market and there was a healthy bequest to be divided among siblings.
Of course, by the time the money came through, the property market was in freefall. Unsure what to do, they decided to wait for the property market to bottom out. In the interim, they converted the cash into bank shares. It was the worst mistake of their lives.
They bought when the shares were worth about €10 each. They were down from a high of €18 and were considered to be undervalued. Surely the only way was up?
They curse themselves for not taking the loss when the shares started to slide but in their minds at least the fundamentals were still sound. The bank was still making money.
But last week as shares tumbled and rumours of nationalisation emerged, yet again they are now thinking the unthinkable; that their entire life savings built up over 30 years of toil will be wiped out. As of last week, they have lost over €280,000.
She, in particular, is distraught. The loss of their personal savings is bad enough but the loss of the inheritance given to her by her father has been emotionally devastating.
Many of their friends have been made redundant, so they feel ashamed to talk about their losses when others are so much worse off. They never wanted to be millionaires, they wanted only the security of savings for a rainy day. That comfort has been torn from them.
- JEROME REILLY
