Tuesday 21 November 2017

TH€ PUNT: Revitalised BoI charges forth

LIFE is getting difficult for customers of Bank of Ireland.

Days after it borrowed €1bn in the markets, the "pillar" bank is imposing a new charging regime on its personal customers.

No doubt, part of the reason the covered bond got away successfully is down to the bank imposing more costs on customers.

Last month, Bank of Ireland and its subsidiary ICS hit thousands of existing customers with a 0.5pc rise in variable and loan-to-value rates.

And from yesterday most of its 1.2 million current account customers will feel the squeeze from new rules.

Only those who maintain a balance of at least €3,000 in their accounts will avoid transactions fees of up to 28c at a time.

This is the second time that the bank has changed the criteria for avoiding transactions charges. Up to now customers could have avoided fees by lodging €3,000 to the account once a quarter and also making at least nine debit payments from their account each quarter.

Alternatively, they could have escaped fees and charges by keeping €3,000 in their account during the entire quarter.

From now on the only way to avoid fees and charges on the Pay As You Go and Flat Fee accounts will be to stay in credit of at least €3,000 every minute of every day of every month. No interest will be paid on this sum.

Cheap sales send a chill

Ouch. The Punt can't be the only one wondering what yesterday's sale of £1.46bn (€1.8bn) in Irish property loans at just 10p in the pound means for other sellers of distressed Irish assets.

It's a fair guess the Lloyds numbers sent a chill up the spines of Mike Aynsley at Irish Bank Resolution Corp (IBRC) and Brendan McDonagh at NAMA, each sitting on their own piles of distressed Irish property loans.

AIB has property loans it would dearly like to find a new home for, but has struggled to get the price it's after.

Lloyds is best known in this part of the world as the bank forced to swallow up Halifax Bank of Scotland (HBOS) following the credit crunch.

The bank has already beaten a retreat out of Ireland, so may be more inclined to take low-ball bids than the Irish sellers.

Its loans may also be just plain worse. For example, NAMA's loans tend to be on bigger deals backed by better-located assets than those of the banks as a whole.

In its day, Bank of Scotland was a particularly aggressive lender, which is saying something when you consider its rivals.

Conservatives avoid the blues

IN business, conservatism was out of fashion for many years while everyone seemed to be able make a fast buck. Now, however, conservatism is very much "in".

It has been a watchword that FBD boss Andrew Langford has abided by for some time and yesterday's interim management statement confirmed his strategy's virtues.

By increasing earnings-per share guidance by 10pc, FBD reassured the markets and became the latest insurer to please them. The insurance industry is still shrinking, but FBD is beating the market and remains strong.

Conservative management of its underwriting business has continued and, as a result, the levels of claims being made have dropped.

Mr Langford has apparently decided to stop chasing premiums and follow a conservative business model. Judging by yesterday's figures and the long-term performance of FBD's share price – up 53pc in the last year – the strategy seems to be working.

Irish Independent

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