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Noonan examining ways to capitalise banks It is believed the Minister for Finance Michael Noonan told the IMF that he will look to Contingent Convertible Capital (CoCo) Notes if the banks need additional capital buffers following the stress tests.
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‘Banking service’ an oxymoron for investors
By Joe Gill
I decided to contact my branch bank for a bit of advice last week.
I dialled up and was routed to a central service where I was asked for account details. My branch, I was assured, would call back. It did not.On Saturday, I visited the branch. At the counter, I asked for a simple piece of advice. The teller went away for a couple of minutes before informing me she could not help. Instead, I should call a number she provided. I did.
Fifteen minutes later, I was hanging on the phone as an insincere recording told me “your call is important to us. Please wait for the next available operator.”
I eventually hung up.
The back story to this tale is that I wanted to give the bank a very simple piece of business. We plan a very modest refurbishment of our house. Instead of using oursavings, I was looking for advice on how I could take a short-term mortgage for an amount equivalent to less than 10% of the value of the property.
This is a no-brainer piece of business for the bank. The risk is de minimis, the payback period is short, and it would earn interest payments way above their existing cost of funding.
“Banking service” is now an oxymoron. Amid their self-inflicted meltdowns and a systematic evisceration of branch banking, these financial institutions are in a horrible state.
While fancy advertising campaigns are conducted assuring all about their desire to lend money, the actual behaviour on the ground is flawed and counter productive.
The extensive use of recorded messages and the removal of human contact from the banking relationship ensures an absence of trust between the bank and its customers.
At a time when the economy needs the proactive engagement of the banking system to kick-start recovery, this is a dangerous state of affairs.
Banks are like oxygen providers in the economic eco-system. The steady flow of money through the veins of the economic body allows businesses not only to exist but to invest and expand too. Investment, using conservative levels of debt, helps stimulate economic activity, create jobs, and support tax revenues for the state. When that system of money flow is blocked or obstructed, the economy is prone to clots and breakdowns.
If the bank branch last Saturday had someone who could have held a quick conversation with me, it is probable I would have signed on the spot for a relatively small loan. That would have triggered a call to an architect and a builder. They would have moved to start work on our house within a couple of weeks. The project would have lasted about three months, during which jobs would be activated, money would have flowed to suppliers and employees, and we could have make our contribution to the Irish economy.
Instead, I’m left frustrated and fed up with a bank that I have done business with for over a decade.
I’m sure hundreds of individuals are in my situation. Yes, some of them may be looking for loans that are not acceptable for the tough credit criteria that apply after the global financial crisis. But many will be perfectly workable deals that can add their own piece to getting Ireland off its knees.
Can we really afford to have a banking system that casually obfuscates and ignores its regular customers in that context?
I hope the banks stop spending money on pretty poster campaigns trying to convince us they care about their customers and divert those resources towards making their employee and phone systems work better instead.
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