Reports Lloyds may close Halifax

FOREIGN-owned banks have been pricing themselves out of the Irish mortgage market, with some likely to cease lending entirely, according to experts.

This news comes as reports suggested yesterday that Lloyds may close Halifax, its Irish retail-banking unit.

The decision to shut the Halifax unit in Ireland follows an instruction from the British treasury to cease lending in the country and repatriate assets, according to speculation.

Director of the Irish Mortgage Corporation Frank Conway said moves by foreign-owned banks to curb mortgage lending could be seen as a precursor to winding down some aspects of their operations.

“I call them spectators – unlike players and substitutes, they have little appetite for the mortgage game at the moment,” he said.

In recent years non-Irish-owned banks launched had some of the most aggressive mortgage products onto the Irish market.

Ulster Bank was a leader in the 40-year mortgage category, while First Active launched 100% mortgages to much fanfare in the summer of 2005.

Bank of Scotland entered the Irish market with very cheap tracker mortgages which forced other banks to follow suit.

“Whether or not banks pull out, I wouldn’t equate a loss of appetite for lending with a high probability for abandoning the market – at least not yet.

“What is likely to be a factor are political factors at home and I would expect there to be some that would question use of taxpayer funds to finance overseas lending operations,” said Mr Conway.

Associate Director with Financial Engineering James Maguire said that from the criteria and rates advertised by some of the foreign -owned banks it is obvious that they “do not want business and are effectively closed for new business”.

“They are concentrating on chasing arrears and getting the book clean and tidy,” he said.

“AIB and BOI (ICS) have a wide range of good competitive rates for both homeowners and investors and are lending. Yes, the criteria has got much harder, but then employment conditions are tougher and the majority of people’s incomes have been reduced significantly so it is fair to say that it is harder to get clients approved,” he said.

Foreign-owned banks in Ireland include Bank of Scotland (Ireland), KBC, Ulster Bank and Danske.

It was reported yesterday that Lloyds may soon announce further losses of as much as £13 billion (€15bn).

Lloyds will reveal the losses in its first-half results, scheduled to be reported in three weeks.