Banks claim they can face credit crunch challenges (Irish Examiner)

04 November 2011
The credit crisis will continue to impact on Irish banks until the end of the year, but they are well positioned to meet any global challenges.
The volume of mortgages being approved at banks is not falling, but people are becoming more reluctant to draw down their loans.
The country’s largest bank, AIB, said it has approved the same volume of mortgages in the three months to May as in 2007, but draw downs have reduced by 12% as customers lose confidence in the market.

Senior executives from AIB, Bank of Ireland, Permanent TSB and Anglo Irish Bank seemed united in the belief yesterday that although the economic environment is challenging at the moment they are not facing any major crisis.
Speaking to politicians at a meeting of the Oireachtas Finance Committee, Anglo’s finance director, Willie McAteer said his bank was not facing a rights issue, while AIB’s managing director, Donal Forde, said he believes Irish banking shares can only improve as the economy does.
He noted that shares in Irish banks are down over 40% over the last year, but said banks in Britain have seen their share prices fall by between 45%-70%.
Bank of Ireland’s chief executive of retail financial service, Richie Boucher, said Irish banks are not facing capital problems but rather liquidity issues.
“We do not believe that we have capital problems. The issues that we face are more down to liquidity rather than capital,” Mr Boucher said, adding he did not believe that there was a Northern Rock equivalent lurking in Ireland.
Mr Boucher also said there were no arrears on his bank’s portfolio of 100% mortgages.
The Irish Bankers Federation (IBF) said Irish banks have seen no major rise in repossessions this year even as lending rates increase and the economy slows.
In 2007 there were 15 home repossessions in Ireland, IBF chief executive Pat Farrell told the committee.
Permanent TSB chief executive David Guinane added that there was no change in the number of repossessions at the bank, and said arrears were at a record low.
Mr Guinane also said he was optimistic about the medium- and short-term outlook for the banking division of Irish Life & Permanent.
“We are very happy with the business volumes we’ve been experiencing,” Mr Guinane said, adding that he cannot see any return to the days of 100% mortgages in the near future.
Mr Boucher said he expected the problems caused by the global credit crisis to last at least until the end of this year.
“Our profits are a matter of record.
“We do not anticipate that we will make the same amount of money this year as we did last year,” he said.
Mr McAteer said there had not been the same degree of “irrationality” in lending to developers as had been evident among some British lenders using conduits.
“I would reject that (Irish) banks have been foolhardy in recklessly lending,” he said.
Executives from the banks appeared at the committee to answer questions after raising lending rates and restricting loans amid the global shortage of credit.