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Posts tagged ‘Financial Regulator’

These figures are not telling the real story!

Central Bank figures published today show 55,763 home loans, or 7.2 per cent of all mortgages, were in arrears for more than 90 days at the end of June.

Central Bank figures published today show 55,763 home loans, or 7.2 per cent of all mortgages, were in arrears for more than 90 days at the end of June.

This compares to an arrears level of 6.3 per cent three months ago, and 5.7 per cent at the end of last year.

At the end of June there were 777,321 private residential mortgage accounts held in the Republic of Ireland to a value of €115 billion.

According to the Central Bank, 69,837 residential mortgages were categorised as restructured at the end of June. This compares with 62,936 restructured accounts at the end of March. Of this total 39,395 are not in arrears.

Between April and June mortgage lenders applied to commence proceedings to enforce the debt/security on a mortgage in 209 cases comprising arrears totalling €7.2 million built up on loans equating to €60.2 million.

Chief executive of the Irish Brokers Association Ciaran Phelan said banks are starting to understand that restructuring was the “only real solution”.

“According to these numbers, over 4,000 mortgages in arrears were restructured during the quarter; this number needs to rise significantly if we’re to slow the growing level of arrears – there were 6,000 new households in arrears in the quarter,” he said.

The Government is considering establishing a new agency with legal powers to enforce debt restructuring agreements between banks and struggling home owners. The Cabinet is awaiting a report from an expert group due by the end of next month.

One measure now under consideration is converting the Money Advice and Budgeting Service (Mabs) into a personal debt management agency, which would be given “quasi-judicial status” to enable it to “support families who make an honest effort to deal with their debts, including non-mortgage debt”.

These new legal powers would enable such an agency to require banks to achieve a resolution in these cases. Mabs spokesman Michael Culloty said today that about half of its clients came seeking mortgage advice.

Mr Culloty said that distressed mortgages remained a “growing problem”.




Mortgage arrears will remain a problem and I expect it to be endemic by the end of the first quarter of next year. With Christmas out of the way and new debts added to the old ones, I believe people will have had enough! While our gutless politicians tinker around with the very real problems of homeowners debts it will be impossible to sell the concept that citizens must continue to bail out developers in NAMA and continue to pay them 200,000 Euros ,while at the same the ordinary Joe have to endure a lifetime of debt .The Banks were just as much responsible for pumping up prices of shoeboxes  and they must have known that the chickenswould come home to roust some time !

The Financial regulator abandoned his Responsibility to regulate the financial industry allowing them to become gambling hubs, accountability was nonexistent and political interference in the property market allowed and felicitated the exploitation of gullible citizens .The printed press heavyweights  all enjoyed hefty profits advertising these overpriced future slums to the masses. Now they are supporting the gutless politicians in keeping the masses in financial slavery.

People of Ireland stand up and cast off this yoke from around our collative neck!

BoI lent top brass €50m as it refused businesses cash


Sunday June 12 2011

FIFTY million euro that Bank of Ireland could have used last year to save hundreds of small businesses from going to the wall was lent to the bank’s directors and people ‘connected’ to them instead, the Sunday Independent can reveal.

The shocking figures — which lie buried on page 300 of the bank’s latest annual report — were last night described as “disgraceful” by independent TD Shane Ross.

“Taxpayers and small shareholders deserve an explanation for how State-owned banks can allow top directors and staff such generous facilities while small businesses are being crucified,” he said.

The Dublin South TD — who is hotly tipped to secure the chairmanship of the Dail’s Public Accounts Committee — called on Finance Minister Michael Noonan to seek an immediate explanation from the Bank of Ireland on the controversial loans.

“Now that the State owns 36 per cent of the bank and is likely to have a majority stake shortly, the Minister for Finance should call in the Chairman and Chief Executive, Messrs [Pat] Molloy and [Richie] Boucher, and ask how the bank is continuing to behave in such a generous fashion to its own top brass,” he said.

The most startling case shows how one unidentified person ‘connected’ to Bank of Ireland governor Pat Molloy received a massive loan of €35.2m in 2010.

According to the bank’s own definition, a ‘connected’ person can be “a director’s spouse, parent, brother, sister, child, a trustee where beneficiaries of the trust are the director, his spouse, children or a company which he controls, or a company controlled by the director or a person in partnership”.

While the Molloy loan was reduced to €640,000 by the end of 2010, the bank’s decision to sanction the original multimillion-euro loan at a time when it was itself in a fight for its own survival will invariably raise questions about the judgement of its senior management.

Further scrutiny of the bank’s latest annual report reveals how 20 members of Bank of Ireland‘s so-called Key Management Personnel (KMPs) and people connected to them saw their loans from the bank increase from €9.301m on April 1, 2009 to an eye-watering €13.999m by December 31, 2010.

The staggering increase in the amounts lent to the bank’s senior management and people connected to them is all the more bewildering when one considers BoI‘s battle to raise €4.2bn in fresh capital in a desperate bid to avoid outright State ownership.

The rules governing the disclosure by banks of loans given to their directors were tightened considerably by the Financial Regulator in the wake of revelations in December 2008 that former Anglo Irish Bank Chairman Sean FitzPatrick had borrowed €87m from his own bank.

Under the new rules, all banks under the control of the Financial Regulator must provide details of all directors’ loans and borrowings.



What can one say to this except that the culture in the Banks still haven’t change and the new government hasn’t done anything to change this. These “loans” to top personal and their pals must be taken back and the Finance minster must immediately put into effect new rules that all loans to directors and top staff at all banks must be approved by the department of Finance.

 An investigation must be conducted and the directors should be removed .There are public interest directors also on the board of bank of Ireland why haven’t we heard from these insiders could it be because some of their pals were in fact the beneficiaries of such loans? Whatever the reason it is now amply clear to the ordinary taxpayers of this country that the so called public interest directors have failed to do the job they were supposed to do and the  banks cannot be trusted and more rigorous regulation is absolutely necessary, particularly  regarding loans to bank personal and their siblings.

This practice should be outlawed and I am surprised it hasn’t happened already.

So the Finance Minster should waste no time and sack the lot !     

PS: whatever happened to “not one red cent” ?

Another broken promise ???


New mortgage arrears data shows intensification of problems

New mortgage arrears data shows intensification of problems

May 19, 2011 by namawinelake

This morning, the Financial Regulator Matthew Elderfield released the mortgage arrears data for quarter one of 2011 together with enhanced information on restructured mortgages. The headline is that mortgage arrears are still rising and the pace is increasing slightly. Here’s the data together with as much historical data as is available:

(Click to enlarge)

In short arrears are up more than 10% relative to the previous quarter and up 55% compared with quarter one of 2010. Some 6.34% of all mortgages are over 90 days in arrears and the pace of increase is increasing slightly (the total in arrears increased by 0.68% in Q1, 2011, 0.53% in Q4,2010, 0.513% in Q3,2010). Repossessions in the quarter were at their highest level since these current records began but at 140 are still minute compared to other jurisdictions eg US and UK – forbearance measures by banks and our lack of a modern bankruptcy mechanism might the reasons for this low statistic. The restructured mortgage data is new and I extract here the table from the report published today:

Of interest is that not one mortgage that has been restructured, has been a tracker where the borrower has been forced to take a standard or other mortgage product as a condition of a restructuring agreement. Or if that isn’t the case, the Financial Regulator hasn’t deemed it noteworthy to include such a heading. The under-reported scandal of banks being able to strong-arm vulnerable mortgage holders into surrendering valuable tracker mortgages for standard variable mortgages as a condition of agreement to any restructure has long been a bug-bear on here.

Also it is not quite clear how many restructured mortgages are included in the arrears figures. The report indicates that there are presently 62,936 restructured mortgages and of these 36,662 are not in arrears indicating that 26,274 are in arrears, though some of these may be less than 90 days in arrears.

So if you were to ask the question “how many mortgages are in some difficulty today?”, you’d have to add the arrears of 90 days+ (49,609) to some restructured mortgages (at least 36,662) to give you at least 86,271 or 11% of the total mortgage book. There are reportedly some 16,000 mortgages in receipt of some form of State mortgage assistance, some of these may be included in the arrears/restructurings but some may not.



On the 8th of November last Morgan Kelly warned of the upcoming mortgage default tsunami and I for one agree with him we ante seen nothing yet !

read his article here http://www.irishtimes.com/newspaper/opinion/2010/1108/1224282865400.html

A cheeky offer on tracker mortgages from Permanent TSB

Sign of a mortgage centre in East London

Image via Wikipedia

By namawinelake 

source URL: http://wp.me/pNlCf-1iZ

I was surprised last year that our new Financial Regulator, Matthew Elderfield didn’t make a point of intervening in mortgage restructuring where banks were strong-arming distressed mortgage borrowers into giving up their tracker mortgages in return for the bank restructuring their mortgage loan – and to be clear, restructuring was not about debt forgiveness, it was about allowing a period of interest-only mortgage payments, or extending the term of the mortgage or giving a mortgage repayment holiday but adding the arrears and interest to the mortgage; there were no free lunches when Irish banks were restructuring mortgages. But what seemed heinous was the fact that banks were demanding that vulnerable borrowers cede their tracker mortgages as a condition of any restructure. This issue was examined in some detail in a post on here “Tiger Robbery versus the great Celtic robbery”. To the best of my knowledge neither the Financial Regulator nor the near-invisible, Financial Services Ombudsman, William Prasifka, confronted the issue.
Tracker mortgages, that is mortgages whose interest rate is set at a fixed margin above the main ECB lending rate and which represent some 400,000 of the 785,000 mortgages in Ireland are a headache for the banks. Even after the 0.25% increase in the main ECB rate two weeks ago, typically tracker mortgage holders are paying 2.25-2.5% per annum. On funds that cost banks in the order of 5% (that is an guesstimate, ECB funding is at 1%, CBI funding at 3%, deposits might pay 4% and the “market” is charging north of 6% and the banks are desperately trying to recoup losses), these 2.25% mortgages force the banks to make losses. Permanent TSB (PTSB) is understood to have approximately 30% of outstanding Irish mortgage debt and is regarded as having the largest stock of tracker mortgages. This morning it made its tracker mortgage borrowers an offer. A cheeky offer.
The offer as reported by RTE is that if tracker borrowers pay down €5,000 from their outstanding mortgage (or multiples of €5,000 – presumably that means €10k, €15k, €20k etc) then PTSB will give the borrower 10% of the payment. The table below shows the interest PTSB would receive on a mortgage whose interest was set at the bank’s standard variable rate of 5.19% and what the bank would receive on a tracker whose interest rate was set at 1% above the main ECB financing rate of 1.25%.

(Click to enlarge)
If your mortgage has less than 4 years to run, then the bank roughly breaks even on the deal announced this morning. If you only have a year to run on your mortgage for example, then the 10% of the €5,000 that PTSB will give you will be worth more than three times what the bank might expect to generate in profit. On the other hand if you have more than four years left on your mortgage then PTSB starts to profit. And at the extreme if you have 30 years outstanding on your mortgage, then PTSB could be expected to profit to the tune of €3,910 (€4,410 less the €500 they pay you) for every €5,000 you repay. Cheeky.
PTSB CEO David Guinane is reported by RTE to have said “’It’s in both parties interest to reduce the amount of outstanding balances on tracker mortgages” Well it might be in your interest if you have a tracker mortgage and are unable to get a better rate of interest on the €5,000 that you are being tempted to repay PTSB. You can get up to 4.2% from PTSB deposit accounts, 9.7% from 10-year Irish sovereign bonds, 9% from residential property. Yet PTSB is prepared to give you less than a measly 2% over a five year period on your €5,000 repayment.
I haven’t seen the letter that has apparently been sent to PTSB tracker mortgage borrowers so I don’t know what information has been provided or what the letter says about seeking independent financial advice. But if past experience is anything to go by, the Financial Regulator and Financial Services Ombudsman will sit on their hands whilst consumers of financial products potentially get fleeced. And lastly, given that borrowers with shorter remaining mortgage periods could benefit from this deal, I wonder what external oversight there will be to ensure PTSB don’t just accept applicants for the deal that have 4 years plus remaining on their mortgages.

Gardai will say ‘no law was broken’ by Anglo 10

Irish Independent

GARDAI are to recommend that the “golden circle” of 10 businessmen who were loaned money by Anglo Irish Bank to buy shares in the stricken financial institution should not face charges.

Investigators were unable to find evidence that the ‘golden circle’ committed a crime in accepting loans from Anglo Irish Bank to buy a 10 per cent stake during a critical financial period, according to an informed source.

The fraud squad will report their findings in a file to be sent to the Director of Public Prosecutions within weeks, at the end of an 18-month investigation. The criminal investigation into executives at Anglo Irish Bank who organised the “loans-for-shares” deal continues, however. The Office for the Director of Corporate Enforcement is still investigating the transaction.

The garda file on the “Anglo 10″ is the first to be sent to the DPP in relation to the biggest financial investigation in the history of the State. At least 15 other criminal matters remain under investigation.

The identities of the 10 have never been formally disclosed, despite pressure from opposition parties. They include some of the country’s top developers and business people who were long-term clients of the banks. Some of the 10 were interviewed by gardai, while others engaged through legal advisors, according to the source.

The “golden circle” of investors was assembled by Anglo in 2008, after insurance tycoon Sean Quinn bought a 25 per cent indirect stake in the bank but sought to reduce it to 15 per cent. The remaining 10 per cent stake would have flooded the market, driving the share price down and further destabilising the bank.

Anglo hand-picked 10 of its long-standing clients, approaching each individually and offering them loans totalling €451m to buy up the 10 per cent share overhang. The loans were secured against the shares, with 25 per cent secured against the assets of the “golden circle”.

Anglo has since admitted it will have to write off €300m of the loans, a loss that will be carried by the taxpayer.

The identities of the 10 were referred to in internal documents as the Maple 10.

The Financial Regulator referred the transaction to the garda fraud squad last year on suspicion that Anglo had mis-represented the transaction to the regulator because it did not disclose to the regulator that it was financing the share deal.

In relation to the Maple 10 transaction, their inquiries have focused on whether the bank concealed the fact that it financed the loans to the Maple 10 to buy the stake.

While the 10 individuals are expected to escape charges, the investigation into the role of Anglo executives in structuring the transaction is still under investigation.

Ulick McEvaddy, a well-known business figure, famously described the “Anglo 10″ as “heroes” who were prepared to put themselves at risk to support the bank. Taoiseach Brian Cowen has refused requests to name the 10 on the advice of the Attorney General.

Investigations are continuing into potential market abuse and market manipulation in a series of share deals and loan transactions that propped up the troubled bank in the months before its collapse. The offence carries a 10-year prison sentence and up to €10m in fines.

The principal criminal investigation surrounds the transfer of €7bn from Irish Life and Permanent to Anglo to bolster its accounts as the bank came to the end of its financial year.

Sean FitzPatrick, the bank’s former chairman, has been arrested and questioned about the transaction. Mr FitzPatrick is also being investigated over €87m in personal loans over eight years which did not appear in annual reports. Another Anglo executive, Wille McAteer, was also arrested. Its former chief executive, David Drumm, has arranged to be interviewed by gardai.

source: http://www.wiseupjournal.com//?p=1636


If this is going to be the result of the Gardai investigation then there is no law in Ireland except for the poor !These golden circle lads were privy to insider information and were guilty of insider trading this is of course illegal and there must be prosecutions .Attempting to manipulate the shares of an institution you know to be bankrupt is obviously fraud and the fact that these people were able to take advantage of the insider information by hedging themselves shows that they were able to benefit financially when the ordinary shareholders were about to lose all of their invested funds. This stinks of corruption !

Date of formation of a new government

By  namawinelake 

source URL: http://wp.me/pNlCf-103

When Bill Clinton left the White House in 2001 after two terms in office and with successor, Republican George W. Bush’s administration about to walk through the doors, it seems Clinton’s staff decided to play some practical jokes and prised the letter “W” off many keyboards in the White House, removed door knobs and my own favourite, interspersed random sheets of paper with pictures of naked people in the photocopier paper trays – yep, that was the standard of sophistication back then. You’d have to wonder how Fianna Fail might mark their departure from office after nearly 15 years in power should they find themselves outside government after the forthcoming election (but remembering that Paddy Power put FG/FF as the second favourite for a coalition at 14/1, that’s after the odds-on favourite of FG/Lab at 1/16). With an election now seemingly due between 22nd Feb – 2nd March (and Minister O’Cuiv who will have Constitutional responsibility for announcing the date suggesting on radio this morning that Friday, 25th February seems the most likely date at this stage), Fianna Fail have some weeks yet to plan any practical jokes though some might say they couldn’t outdo themselves following the collapse of the economy, banking and construction sectors, soaring unemployment, emigration, negative equity, huge personal debt, an IMF/EU bailout with crippling interest rates and the loss of reputation worldwide. But between now and whenever the new government is formed, there will be a lot going on in the Irish economy. It might be worthwhile reminding ourselves of what was agreed with the IMF and EU with respect to Q1, 2011 actions (prominent actions highlighted in red on here). For the IMF/ECB Memorandum of Understanding In addition there are still some outstanding actions from Q4, 2010 like agreeing a loan:deposit target for Irish banks (presently around 170% though it seems the IMF/EU want us to reduce that to 100-120% within three years – the target though was supposed to have been agreed in December 2010 and it wasn’t). Despite attempts by the Department of Finance, the Central Bank of Ireland and government to get an extension to 28th February, 2011 date set for the next recapitalisation of the banks, the IMF and EU have stood firm, so it looks as if the State will need inject “in equity shares” (from the Financial Regulator’s PCAR/PLAR announcement on 28th November, 2010) (1) €1.5bn into Bank of Ireland (the €2.2bn identified in the Financial Regulator’s PCAR announcement on 28th November, 2010 less the €0.7bn raised in the December debt-swap) (2) €4.7bn into AIB (the €6.1bn identified in the Financial Regulator’s PCAR announcement on 28th November, 2010 less the €1.4bn raised in the January 2011 debt-swap) (3) €0.4 for EBS. In the case of BoI the injections will probably not be new money as the State already has some €1.8bn of preference shares which might be converted to Core Tier 1 (note the IMF/EU Memorandum of Understanding calls for the injections in “equity shares”) And on 19th February, 2011 BoI might need some assistance from the State as €214m in preference share dividends fall due for payment to the NPRF on that date. Lastly, yesterday it was reported that the latest restructuring plan for Anglo/INBS (is that version 5.0 for Anglo?) went to the Senor Almunia at the European Commission. It seems that there is a lot going on at present which the present Minister for Finance is unlikely to see through. And his putative successors don’t seem to be kept in the loop on present developments. Of course if we continue to get performances like Enda Kenny’s Princess Di-type interview on “The Week in Politics” with Sean O’Rourke playing the role of Martin Bashir, the composition of the government in March 2011 might not be as expected and who knows, it could be that Minister Lenihan remains in his office – a long shot for sure but these are uncertain times.


The ship is on the rocks and the entire officer crew have abandoned ship leaving the passengers to their faith ,now we have another would be crew in waiting and I wouldnt bet on them getting the ship of the rocks as they weren’t shining examples in their last job and they have the same principals as the last lot namely suck the passengers dry !

competence of companies that provided information underpinning key policy decisions

Is it time to investigate the competence of companies that provided information underpinning key policy decisions in our financial crisis?

By Namawinelake

Looking back at the financial crisis over the past three years, it is striking that at practically all milestones the information upon which key decisions were made has turned out to substantially wrong, in particular the assessment of the problems in the banks and more specifically still, the losses on property loans.
If, back in September 2008, it was known that the banks’ assets were not worth €500bn as claimed but were worth substantially less, would the Government have campaigned to introduce a guarantee of bank liabilities then worth €440bn? If, at the start of 2009, the Minister for Finance knew of the likely losses in what would later become the five NAMA Participating Institutions, would he have started a recapitalisation programme that may see €80-90bn ultimately taken from State coffers (through borrowing) and shovelled into these black holes? If, at the start of 2009, when Dr Peter Bacon was reporting on the desirability of an asset management agency, he knew that the haircut to be applied to loans would be 60% rather than 30%, would NAMA ever have seen the light of day? It seems to me that these three key moments in our State’s economic history are characterised by the Government acting on poor information. Of course it is to be recognised that information can modify over time and there was a deterioration in the economic environment, both here and internationally, from 2008 which will have affected more up-to-date values. But even taking account of the passage of time, was the information produced by the institutions and external advisers, at such colossal cost to the State, so significantly inaccurate that it is time to investigate the competence of those companies that produced the information?
What prompts this entry is a letter dated 23rd December, 2010 from the current Financial Regulator, Matthew Elderfield, to the Committee of Public Accounts, which has just now been published, in which he encloses copies of the invoices paid in respect of advice received by the Financial Regulator in respect of the Bank Guarantee Scheme and “the discharge of other related supervisory duties”. The invoices are partly redacted by the Financial Regulator to remove the names of consultants and the companies’ banks details for payment of the invoices. The second redaction is understandable but isn’t the identity of the consultants that were seemingly paid substantial sums (€1,000-plus and expenses per day typically) of public interest?
I have extracted the invoices from Matthew Elderfield’s letter for ease of review and they are as follows (sorted by invoice date – click on the description for a copy of the invoice):
DateCompanyAmt (ex VAT)Description
27/11/2008PwC1,670,000Work on six State-gteed banks
31/01/2009PwC1,139,150Work on 5 NAMA banks and JLL fees
19/02/2009Deloitte95,720Review of directors loans
06/03/2009PwC23,415Secondment 11 days Feb 2009
03/04/2009E&Y16,667Secondment Feb 2009
03/04/2009E&Y16,667Secondment Mar 2009
03/04/2009E&Y16,667Secondment Dec 2008
03/04/2009E&Y16,667Secondment Jan 2009
28/04/2009KPMG1,034,080Investigations Mar/Apr 2009
23/06/2009PwC214,480Ref to “Engagement letter April 2009”
30/07/2009KPMG218,219Investigations and “potential ASPs” Apr-Jul 2009
21/09/2009PwC239,310Impairment provisioning INBS
30/10/2009PwC225,750Impairment provisioning EBS
06/01/2010Deloitte56,9992 secondments for 21 days
19/02/2010E&Y87,394″Professional services”
03/03/2010PwC464,500Due diligence
03/03/2010PwC483,100Due diligence
20/08/2010E&Y34,000″Professional services”

There are three invoices of particular interest and they are:
The PwC invoice from 31st January 2009 which includes a charge of €691,250 in respect of “Jones Lang Lasalle Valuations”. And this has continuing relevance for NAMA because JLL’s managing director at the time, John Mulcahy, is now NAMA’s Head of Portfolio Management and arguably NAMA’s most senior property man. It should be emphasised that it is not disclosed on the invoice the remit that JLL operated to when providing their services, so for example they may not have examined loan documentation which, following NAMA’s legal due diligence exercise, proved to be execrable. It should also be stressed that property values continued to drop in late 2008 and 2009.
The two PwC invoices dated 21st September, 2009 and 30th October, 2009 which relate to the impairment provisioning in INBS and EBS. Knowing that the last estimates (in October 2010 – yes, the NAMA CEO did indicate lower estimates last week at the CPA but those are on incomplete loan transfers) of final haircuts for INBS and EBS were 70% and 60% respectively, how competent was PwC’s work in 2009? NAMA’s valuation date is 30th November, 2009 so there may well have been some deterioration in values with the passage of time but November 2009 was only a matter of a few months after the reviews.
A notable omission from the invoices is work on impairment provisioning for AIB, BoI and particularly Anglo. Didn’t the acting Financial Regulator, Mary O’Dea,  think to commission such work? Though on the other hand, given how inaccurate the work appears to be for EBS and INBS in the context of present estimates, perhaps she saved us unnecessary fees.
With NAMA’s acquisition work coming to an end and with yet another review of loans by the troika of Barclays Capital, the Boston Consulting Group and Blackrock Solutions, is it not now time to review the competence of the work undertaken in 2008 and 2009?

source http://wp.me/pNlCf-Xp

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