This morning.

KBC has confirmed its intention to quit the Irish market.

Meanwhile…

…Social Democrats co-leader Róisín Shortall said:

“Finance Minister Pascal Donohoe said he found out about KBC’s proposed exit when he received a call from the CEOs of KBC and Bank of Ireland at 9pm last night to advise him the banks had entered into a Memorandum of Understanding to sell KBC’s performing loans to AIB.

“It is concerning that the Minister was apparently among the last to know of the banks’ plans, given their serious implications for both staff and consumers.”

Anyone?

KBC looks at Irish exit plan with Bank of Ireland deal (RTÉ)

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20 thoughts on “Outta Here

  1. ce

    Another sign of our dysfunctional housing market – massive mortgages needed to buy a house but an overall domestic economy so small no bank cares to be involved.

    We should all put in Ronan type applications for skyscrapers and get money that way… just right it off when it the debt gets to be an annoyance

    or everybody could take out 2 mortgages on Bewleys (other iconic business trademarks and premises are also available) and double the size of the domestic banking market overnight…

    out of the (your) box thinking is needed to fix this one!

    Reply
    1. Mr. T

      Plenty of economies our size or smaller have multiple more lenders than us.
      Its not that there is no interest, its that our market is not profitable because banks cannot repossess property when a mortgage holder defaults. It takes years in courts and legal fees here are extortionate.

      In Denmark and NI it takes 6 months.
      In UK up to 1 year
      In Ireland on average 3 years

      Reply
      1. ce

        “cannot repossess property when a mortgage holder defaults” – definitely a part of it, and likely pushes them over the edge and speeding up the inevitable, but other smaller economies are facing reduction in the numbers of banks too. Domestic banking is just not interest in a globalized property/investing free for all.

        It would be great if more credit unions began to offer full current account services…. doesn’t fix everything but I’d rather deal with them – as I’ve done in other places I’ve lived – than traditional banks

        Reply
  2. Mr. T

    Nobody addresses the elephant in the room regarding mortgage defaulters and the difficulty involved in repossessions.

    Why do they think KBC opted to leave Ireland?

    Reply
    1. Broadbag

      Yep, why stick around when so many take the piss and won’t give up the houses they can’t afford (or strategically decide they ”can’t” afford in some cases) supported by various parasites egging them on, heading towards banana republic territory.

      Thanks everyone who claimed there was no moral hazard to this kind of carry on.

      Reply
    2. jungleman

      I’m not so sure that’s the main issue. If there was widespread defaulting, there would likely be a fall in property values also (as widespread defaulting would be a symptom of an ailing economy) so repossession of the underlying security is not necessarily going to fix the problems for the lender. The profitability is mainly dependent on the cost of the lending for the bank and the competition on offer. Add into that the capital requirements of the Central Bank and it is probably not the most rewarding market for shareholders.

      Reply
      1. Mr. T

        5% or so of their loan book is non-performers who they cannot repossess.
        The total liability though is much larger – seeing as a defaulter is basically an entire mortgage they are out, whereas when a mortgage is paid they only profit on the interest.

        So only a small amount of defaulters with no repossession leads to massive losses.

        Reply
        1. goldenbrown

          yep

          that’s the first thing that crossed my mind this morning. why?

          all the talkshow earlier was about this and that but the “non-preforming” loan book was barely discussed and as you know you can bend a headline number very easily.

          I think it could be a canary….betcha there’s a shedload of new additional pandemic defaulters teetering on the fringes of that picture right now and KBC know what’s coming and want out before they’re caught up in it

          and just wait till the interest rates start to climb

          I would not be buying a stick right now

          Reply
          1. Janet, chatty mammy

            yup just wait until they stop the pup but your job isn’t there to go back to, my whole company are doing online courses and / or moving sector in the anticipation that even if we do open again.. well it’s a dead duck without Americans and a vibrant Dublin around it

          2. goldenbrown

            Janet

            I know some people in the small builder community

            refurbing and flipping single houses would be a bread and butter item for them, “do-er uppers”….usually might be competing with ordinary joe+josephine for a house to do up and sell on

            but right now they’re staying away out of it, they’re not bidding, don’t fancy the odds

      2. Jimmy the mink

        The capital requirements from the Central Bank follow the same rulebook as the entire EU, ie the Capital Requirements Directive.

        The requirements are based on risk. Ireland is high risk due to high levels of unperforming loans, hence the high capital requirements which are one of the main causes of the high costs of business. Other linked causes are maintaining and managing appears and going through lengthy courts processes.

        Reply
    3. Andrew

      Take a bow people like David Hall, Irish Land League Gerry Beades and various ‘ advocates’ for those who don’t want to take any responsibility. Not forgetting our, spineless,indifferent political class.We are well into another property bubble without having dealt with the last one.

      Reply
  3. Jimmy the mink

    There is nothing stopping any other mortgage provider in the EU from offering mortgages in Ireland. They cannot be prevented from doing so, it’s a right of EU membership.

    They just have to comply with EU capital requirements, and local conduct of business rules.

    Why then are we not seeing any European banks entering the market? What’s diffrent about Ireland.

    We all know the answer at this stage. Does anyone have the balls to propose to do anything about it though and will elected representatives have the integrity to recognise the common good?

    Reply
      1. Jimmy the mink

        It’s a small market so limited money to be made in the first place, and that money is limited to a much greater extent due to how hard it is and how long it takes to repossess a property. This makes any investment into Ireland much more high risk with lesser returns and harder to fund, which also results in any Irish providers having to keep a lot of capital on reserve to cover those losses.

        Simply not worth the hassle to set up shop. It would be different if there was an efficient system of repossession when payments were not being made and no effort being made but there is not and some take advantage of that.

        So we can revise that and speed up repossession, give lenders some more strength to enforce standard borrowing terms (failure to pay your mortgage may result in you loosing your home).

        Or we can put up with it as a cost of a national post colonial psyche that abhors eviction, whatever the circumstance (plenty of examples of people who just refused to pay a mortgage for a decade and then outrage when they lose their homes)

        Reply
    1. scottser

      European pension funds are heavily invested here. Very few markets offer what we can; guaranteed rental income from the local authorities for 25 years at which point the investors have paid off their debt and get to keep the property.

      Reply
  4. GiggidyGoo

    So, does the Central bank not inform Donohue of what’s going on in the banking sector?
    Does he really expect us to believe that he only became aware at 9pm yesterday?

    (Roisin Shortall’s input mentions selling loans to )AIB?)

    Reply

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