ISME: Irish Banks not open for Business

More than half of Ireland's small and medium-sized companies have been refused credit by Irish banks in the first three months of this year.
The vast majority of these firms were not looking for large loans or long-term credit, but for the normal over-draft and short-term credit facilities usually available to established businesses.

A nation-wide survey, conducted by the Irish Small & Medium Enterprise Association (ISME), shows that 58% of existing and viable businesses were refused regular credit by their banks between January and March 2009.

This figure is up ten points from the 48% recorded in the last Bank Watch survey, which was published in February. (To put this into perspective: Only a year ago the figure was just below 20%.)

83% of Irish companies said that banks were making it more difficult for small firms to get access to finance. More than half of the companies surveyed have been with their bank for ten years or more.

ISME chief executive Mark Fielding says that the Irish government should "stop pussyfooting around with the banks and force them to free up badly-needed credit".

He points out that the survey's findings are clearly at odds with various public statements issued by Irish banks, saying that they were "open for business".
"Recent initiatives and full-page ads taken out by banks in national newspapers were nothing more than PR stunts," Fielding added. "As far as the Irish small and medium-size companies are concerned, the banks are not open for business."

If this unacceptable behaviour continues, more Irish businesses - most of them sound, viable and well-established - will be forced to cut jobs and, eventually, to close.

Not enough that the banks created our financial crisis in the first place and turned Ireland from boom to bust within a few short months. No, now that the government has guaranteed their existence and bailed them out with billions of taxpayers' money, they become really nasty.

Instead of using the money from the re-capitalisation to stimulate the Economy and provide small and medium-sized businesses with normal credit and cash-flow facilities, Ireland's banks - especially AIB, Bank of Ireland and permanent tsb - are now hoarding money like never before.

If it needed any further proof, this is clear evidence that the banks are no longer part of the normal business environment, and certainly not the "cornerstones of our Economy", as the government and Fianna Fáil keep telling us again and again.
Banking has become an immoral activity, geared only towards the banks' interests and with absolutely no regards for other businesses, for individuals, the Economy or the nation as a whole.
I think we should stop calling them banks, and refer to them in future as 'pigeons'. Because like these parasitic birds the bankers want to be fed when they are on the ground, but when they are up in the air again, all they do is dropping excrements on all of us.

The Emerald Islander

And some good News coming through as well...

In my earlier entry from this afternoon I mentioned that some statisticians regard January 19th as "the most depressive day in the whole year" and indeed plenty of people obliged to make it so. In particular the stock brokers in Dublin and London, who sent the financial markets - but especially bank shares - down into the proverbial cellar.

Despite reassuring words from both governments - in Dublin and London - the world's financial dealers no longer trust us and the value of Irish and UK banks plummeted to another all-time low.
The hurried and quite shambolic nationalisation of Anglo Irish Bank by our government was fuelling the fires of distrust instead of sending the - intended - message of stability and 'business as usual'.
And in Britain the announcement of further billions of taxpayers' money being pumped into the sinking banks did not help them a bit. Quite the opposite. Many international finance houses, especially the cash-rich ones in the Far East on whose willing to lend we now depend more than ever, regard us with great suspicion. Subsequently UK bank shares fell by 68% today, losing over two thirds of the little value they now have in one single day!

The combined forces of government ignorance, regulators' laziness and sleeping on their watch, and bankers' criminal greed have holed both Britain and Ireland in a serious way well below the waterline.
The question by now is no longer when we can stop the ships sinking, but if we can stop them at all.

But even on this "most depressive day in the whole year" there is a little bit of good news as well. Five more directors from the disgraced board of Anglo Irish Bank have today announced their resignation from the board, in order to "make room for a new leadership team".
And not a moment too soon. In my opinion their resignation comes actually quite late, and I have not the slightest bit of empathy for these reckless bankers. They are responsible for the biggest financial and political crisis since the 1930s, and if I had the power, I would send them all to jail and throw away the keys...

An even better piece of news is that Brian Goggin (photo), the Bank of Ireland's highly incompetent chief executive, is stepping down as well.
The bank announced today that Goggin will retire this summer, a year earlier than planned. The bad news is that by retiring - instead of being sacked for the massive failure he presided over - Goggin will get his full pension, a golden parachute and many other perks he does not deserve and has not earned.

A man who presided over the collapse of a major bank that lost 95% of its value in less than two years deserves to be sacked, flogged and made to pay for his disastrous lack of leadership.
But as corrupt as our system is, this is unlikely to happen. Brian Goggin will go home as a multi-millionaire and enjoy a jet set lifestyle for the rest of his days. The bill for his folly will be paid by us - the Irish tax payers. But given the fact that for more than a decade a majority of us has persistently elected the most incompetent politicians to government again and again, we deserve nothing else. (And anyone who will in future vote for Fianna Fáil or the Green Party deserves that things get a lot worse than they are already...)

I suppose we should be content with the good news that five of the main gangsters from Anglo Irish are gone and that the arrogant fool Brian Goggin is following suit soon. All in a day's work, and not so depressing after all...

The Emerald Islander

Speculations fly high after Lenihan's Bank Talks

Bank of Ireland has today confirmed that it has been "approached by a number of parties interested in investing in the bank".

This news comes after reports that a major consolidation of Irish banks has emerged as a possible solution to the current crisis.

Last night RTÉ News reported that talks between Minister for Finance Brian Lenihan and bank chiefs had led to the possibility of a radical overhaul of the Irish bank system. (see also yesterday's entry on this subject)
This led to speculations about what shape this would take, and whether foreign or private equity investors would be involved.

Bank of Ireland shares, which had already climbed this morning, were up almost 25% at € 1.26 just after the statement.

Meanwhile the Group Chief Executive of Allied Irish Bank (AIB) has declined to comment at all on the situation.
Arriving at a posh function in Dublin, Eugene Sheehy (right) said that "shareholders read what they read, but we [the bankers] have no comment to make".
It is really mind-boggling how smug and arrogant Sheehy still is, after having lost 95% of his company's value since he took charge of it in 2005 and having to go now to the State and to us - the taxpayers - cap in hand...

Asked if he could see a situation where there would be only two large banks operating in the Irish market, he responded that was speculation.
Which, of course, it is, cooked up by some financial journalists in Dublin who pretend they can read the mind of Brian Lenihan.

Yesterday's talks involved a series of meetings at Farmleigh (the government's official 'guest house' in the Phoenix Park in Dublin) between Lenihan and senior executives from the financial institutions covered under the State guarantee scheme. (see yesterday's entry)

Since the guarantee was given in September, the Minister for Finance has the power to force mergers between financial institutions. This is one of the concessions the troubled banks had to make before the State was willing to cover them.

After the meetings some participants 'believed only Bank of Ireland and AIB would remain after the shake-up', but there has been no comment on the content of the meetings.

Brian Lenihan (left) said that yesterday's meetings were "focused on ensuring there would be adequate credit for Irish businesses".

The suggestion of a major wave of consolidation would also have to be linked with fresh capital for the banks.

There is, however, still no clear picture of how a final deal would be put together, or how long it would take.

I suggest that the nervous crowd of Dublin's financial journalists stop speculating and second-guessing other people, shut their laptops for a couple of days, relax and have a few pints. As the pressure of the world markets weighs heavily on our banks, Brian Lenihan will have to come up with a solution soon. He knows that, the banks know it, and we all know it.

And when he has made his decision - which is his, and his alone by the power of his office - then we can start analysing and commentating. I hope Lenihan will do a better job with the banks than he has done with the 2009 Budget. And personally I also hope that we will in the end have more than just two banks left in this country. I have never trusted the Bank of Ireland, nor the AIB, and never was a customer of theirs. And if these two - as some people suggest - would remain alone in the field of financial services, we all would be forced to do business with them. I would not feel comfortable with that at all.

In fact, mergers and amalgamations that create ever larger banks are in my opinion not the answer to the current financial crisis. The larger a bank is, the more dominant and arrogant it tends to be, and the more it will also be enticed to participate in the massive internatinal gambling that brought all the big western banks into the trouble they - and subsequently we all - are in now.

I would go in the opposite direction and break up the largest banks and create a number of new small regional banks, whose regulations would limit them to traditional banking activities and ban them from participating in the international speculation and gambling operations. They should be staffed by local people and have an actively positive approach towards small and medium-sized businesses, as well as to idividual customers.
This could and would restore the confidence and goodwill the whole Irish banking sector has lost over recent months, and would also stabilise and stimulate our ailing economy.

The Emerald Islander

Bank of Ireland Shares fell below € 1

Bank of Ireland's share price is back above € 1 this afternoon, regaining some value after losing more than 15% this morning.
It was the first time ever in the 225 year-long history of the bank that its shares fell below € 1.

The bank's shares were the subject of a significant sell-off after it had announced it was suspending paying dividends in a results announcement last week.

Back in February 2007 Bank of Ireland was valued at more than € 18 billion and its shares were trading at well above € 18 a share. Today the bank's value is barely € 1 billion.

In recent times the bank has seen a collapse in confidence, aggravated by acute concern over its exposure to property lending here.

After the announcement of a 32% drop in profits in the six months to the end of September and the suspension of dividend payments last week, its share price began to drift lower to finish last week at € 1.08.

This morning that suspension of dividends has seen the sell-off gain momentum, with the share price falling to 99 Cents, then to 97 and 93 Cents, and eventually reaching the bottom at 90 Cents per share, before regaining 15 Cents to stand at € 1.05 this afternoon.

Investment funds, which hold the shares long-term to earn income from dividends, have had no option but to sell. But they are selling into a market with no appetite for Irish banks, and where 'short selling', which encourages investors to buy shares at low prices, is the subject of a ban from the Financial Regulator.

Analysts think that some people and institutions with plenty of cash - especially from the Middle East and Asia - might be picking up some of the Bank of Ireland shares at these bargain prices, hoping to make major gains when the banking crisis will be over in some years' time.

As a result of the great drop in value, Bank of Ireland was taken out of two of the Dow Jones index lists today.

For Ireland as a country and the Bank of Ireland as one of our main financial institutions today's development is a further sign of how far things have gone and how low confidence in Irish banks - and in particular in Bank of Ireland - is now. And given the bank's unwillingness to put all its cards on the table and declare its complete situation, there is no silver lining on the horizon for Bank of Ireland.

Brian Goggin (right), Bank of Ireland's group chief executive since 2004, must be living on an entirely different planet than the rest of us.
In a statement issued on Friday he declared that his bank was "strong, sound and successful" and did not see the need to raise additional capital at the moment. Nevertheless Goggin was more than happy to sign up to the Irish government's - which means the taxpayers' - guarantee scheme. The sooner he is replaced by a more capable man, the better.

It is more than time for the government to intervene, and it would also help if the bank's remaining share holders would show some more responsibility. How a man, whose business has dropped in value from € 18 billion to € 1 billion in 18 months' time can say he is "strong and successful" is beyond me. Perhaps he should see a psychiatrist, as there must be something wrong with his mind.

Irish banks have been run by a bunch of reckless dreamers and fantasists for years, and that is one main reason for the current problem. Only radical change from the top down can bring sense and normality back into our financial institutions.

The Emerald Islander

Customer Data stolen from the Bank of Ireland

There is a saying that one scandal comes seldom alone. Well, after the immense blunder at Our Lady's Hospital for Sick Children in Crumlin (see entry below) that came to light earlier today, a second one emerged tonight, involving the Bank of Ireland.

According to Ireland's Data Protection Commissioner Billy Hawkes (photo) very sensitive information concerning about 10,000 customers of the Bank of Ireland has been stolen.

Mr. Hawkes told RTÉ that he is investigating the disappearance of four laptop computers which were stolen already last year. But for reasons yet unknown the Commissioner was only informed about the theft on Friday.

The missing laptops were being used by staff working for the Bank of Ireland's life assurance division. They contained information about medical backgrounds, life assurance details, bank account details, names and addresses of about 10,000 customers. Apparently there was software security on the stolen computers, but the sensitive information was not encrypted.

Mr. Hawkes said he was "investigating the case as a matter of urgency", which is not more than can be expected. The Data Protection Commissioner added that his inquiry will focus on the security measures in relation to the computers and on the information they contained.

The Bank of Ireland, which has confirmed the theft, is now planning to inform customers. Well, is this not very kind of the bank? If I were one of their customers (which I am not), I would ring them first thing in the morning and raise merry hell. What the heck are they playing at?

Sensitive customer information is stolen, and they just sit and sleep on the matter for months, before they even do their basic duty and inform the Data Protection Commissioner. And how is it possible that this happened in the first place? What about internal security? If one computer is stolen, one might see that as an unfortunate matter. But four?! This looks more like an organised job.

And only now, after months of doing nothing, they will inform the effected customers. This is the real scandal in this case! We have seen in recent months a lot of reports about malfunctioning of major banks, who lost hundreds of billions due to imprudent investments and outright idiotic speculations. Who is footing the bill for all that? The banks and their shareholders? Oh no. They only take the big profits in good years. Now that there is a crisis, it is you and me and everyone who will pay for it, through higher interest rates, higher mortgage costs and, first and foremost, through our taxes, since the governments have to bail out the banks and saving them from going bust.

Even though I am not a Bank of Ireland customer, I am extremely annoyed by this news and urge anyone effected by the case to make strong representations to the bank, to your local TD, and also to the Financial Regulator, whose job it is to keep control of the banking sector.

The Emerald Islander