Banks ‘helping 30,000 mortgage holders’

BANKS are working with thousands of home owners struggling to keep up with their mortgage repayments.

As many as 30,000 mortgage holders are being facilitated by the banks due to their difficulties in meeting their monthly repayments, according to the Irish Banking Federation.

Banks are working with their customers to help them though the current difficult period that has resulted in over-lending by the banks and over-borrowing by some of their clients.

Pat Farrell, chief executive of the IBF, said in the current difficult climate banks are working hard to stabilise the effects of 2009 and to rebuild in 2010.

Addressing the Chartered Accountants Leinster Society, Mr Farrell said banks here would do everything possible to help people deal with their arrears.

The banks also have to be realistic and pragmatic in how they deal with struggling borrowers, he said.

“We currently have various initiatives from Government and the Regulator and of course the sector itself, which has committed not to take legal action where homeowners engage with their financial provider.”

Banks accept the “need to look after people who have problems” in this very difficult climate, he said.

He stressed the banks “will engage constructively and proactively — with the minister and with other stakeholders — to develop solutions that are socially and economically responsible and which assist in the overall goal of economic recovery”.

He defended the banking sector’s approach to lending to SMEs which Central Bank governor Patrick Honohan said on Tuesday needed greater support if the economy and the banks are to thrive in the future.

Mr Honohan said the banks were running scared of the risk-taking and needed to address that issue.

Mr Farrell stressed the need for caution by the banks as well.

He said that “20%” of SME loans are non-performing, a fact highlighted by the recent Mazars report.

“I think you have got to be realistic about this,” Mr Farrell said.

The Small Firms Association has condemned the lack of cash for small Irish firms since the banking crisis struck. However, the amount of credit outstanding to the SME sector at over €33m has changed little, while the economy “has shrunk by 10%”, said Mr Farrell.

Banks also have to operate in a tougher riskier climate and are required to boost their capital bases while “the risk in terms of lending to the sector (SME) has risen considerably”, he said.