IT:Audit into delays by banks in collecting interest payment

[What_Goes_Up]

irishtimes.com/newspaper/fro … 26406.html

Audit into delays by banks in collecting interest payments
SIMON CARSWELL, Finance Correspondent

THE IRISH Financial Services Regulatory Authority has instructed accountants PricewaterhouseCoopers (PwC) to assess the extent to which the banks are delaying the collection of interest payments on loans to builders and property developers.

PwC is carrying out a forensic examination of the loan books of the six Irish-owned financial institutions covered under the State €485 billion bank guarantee scheme to assess the quality of the loans, the level of interest payments being “rolled up” and the cash being generated by customers to repay their loans.

The audit is being conducted to obtain an up-to-date report to determine how the loans are performing and whether there has been deterioration in the value of the property and other collateral on which the loans are secured.

“We are drilling down into the figures to get a detailed, comprehensive analysis of the individual loans,” said a spokesman for the regulator.

The accountants started examining loans at the six institutions about a month ago, under the direction of the regulator.

They were sent in to the banks, before the bank guarantee scheme was announced, as part of contingency planning by the regulator and the Department of Finance to assess the risks facing the banking system from global financial crisis.

Banks have been postponing interest payments for some builders, developers and property investors who cannot sell properties due to the property downturn.

PricewaterhouseCoopers is expected to report the findings of its examination to the regulator by the middle of next month and possibly by the end of this month.

The regulator will then assess whether the banks are taking a realistic assessment of the value of properties securing the loans, the level of cash being generated to repay the loans and the chances of interest being paid at a later date.

Central Bank governor John Hurley confirmed that Irish banks were rolling up interest on loans to builders and developers when he appeared before the Oireachtas Committee on Finance and the Public Service last July.

AIB said at the bank’s half-year results presentation, also in July, that it was “rolling up” interest for some property developers as there was no activity in the property market and no cash being generated to repay interest.

The bank said it was adopting “a very supportive approach”.

The value of Irish shares fell 3.8 per cent, dragged down by further falls in the financial stocks amid concerns about the level of Government influence in the banks under the terms and conditions of the guarantee scheme which were published late on Wednesday.

The three main banks fell sharply in value. Bank of Ireland dropped 8.4 per cent, followed by Anglo Irish Bank which lost 8.1 per cent. AIB declined 5 per cent.

© 2008 The Irish Times

[DSE3Br]

Why didn’t Patrick Neary give this information when he was asked a direct question on it by elected representatives in the Oireachtas on Tuesday Oct 14th? Who does he think he’s bloody well working for?

[nolai90]

i will say this information will be kept out of the public arena.
wont want to cause a run on the banks
or make the share price any worse than it is

[DSE3Br]

@nolai90

i will say this information will be kept out of the public arena.
wont want to cause a run on the banks
or make the share price any worse than it is

I actually think the share price is based on people presuming the worst because of the dishonesty of the banks. A bit of transparency would help no end.

[xman]

Banks have been postponing interest payments for some builders, developers and property investors who cannot sell properties due to the property downturn.

I’d have said it was more down to the stupid prices the greedy fuckers are looking for myself.

[DSE3Br]

@xman

Banks have been postponing interest payments for some builders, developers and property investors who cannot sell properties due to the property downturn.

I’d have said it was more down to the stupid prices the greedy fuckers are looking for myself.

An the fact that it’s impossible to sell below cost.

[soc]

THE IRISH Financial Services Regulatory Authority has instructed accountants PricewaterhouseCoopers (PwC) to assess the extent to which the banks are delaying the collection of interest payments on loans to builders and property developers.

the banks are now officially w4ankers - you can be damn sure if I didn’t pay my miniscule credit card bill they’d be slapping late payment charges on me yet the developers get deferred interest repayments - like I said w4nkers.

[Ozzy]

@DSE3Br

Why didn’t Patrick Neary give this information when he was asked a direction question on it by elected representatives in the Oireachtas on Tuesday Oct 14th? Who does he think he’s bloody well working for?

Eeeeeh . . . . DUH!

[BrendanG]

@nolai90

i will say this information will be kept out of the public arena.
wont want to cause a run on the banks
or make the share price any worse than it is

Will the report be available under a FOI request?

Probably not I suspect, but can anyone clarify?

[Cypress]

@DSE3Br

@nolai90

i will say this information will be kept out of the public arena.
wont want to cause a run on the banks
or make the share price any worse than it is

I actually think the share price is based on people presuming the worst because of the dishonesty of the banks. A bit of transparency would help no end.

100% agree. The banks biggest issue abroad is that no-one believes a word they are saying. Its got to the point where they have lost complete credibility. They continously underestimate the gravity of the situation facing the Global financial markets and facing themselves.

The old “agh sure, we are rolling up the interest payments a bit longer until things stabilise. We don’t need any capital, because the interest we are not receiving (but should be) is not really a bad loan the way we look at things here in Ireland” is just making them look very naive and has shattered alot of peoples confidence in the way these banks are being managed.

So yes, a bit of transparency and waking up to reality would actually be a positive thing. No one has any issue with losses. Its not facing up to them they really scares people away

[fishfoodie]

I think this is also the black hole that any significant equity injection by the Government would immediately be drawn towards.

The banks would get the money & use it to balance writing off that amount of debt from the developers.

[ewd3]

@Cypress

So yes, a bit of transparency and waking up to reality would actually be a positive thing. No one has any issue with losses. Its not facing up to them they really scares people away

The only circumstances under which transparency would be a bad thing would be where the Banks are actually in a worse state than we imagined and that transparency might force the Gubbernment to make good on a good portion that pesky guarantee…

one might refer to that as an icelandic nightmare

[jihle]

Financial Regulator is not subject to FOI.