HAS THE PENNY FINALLY DROPPED WITH BANKS?

 

The alarm went off at 5.30am this morning and it was cold and wet out, but no rest for the wicked as I needed to catch the 6.50am train to Dublin to get to our office on Harcourt Street.  The business is going very well in Dublin as we hoped it would and certainly with Nick joining the team; it has added a new dimension to the offering.

As I settle into my chair in a packed train, I flick open the Irish Times and the headline hits me straight between the eyes”Deal may help tackle borrower debt arrears”!  Basically the banks were announcing a pilot scheme whereby they were inviting borrowers to negotiate with them regarding property loans through the platform of mediation.  As I continued to read on, it became very clear that in fact this was an unprecedented article I was reading in terms of the banking crisis in Ireland. 

My first thought was to call the office in Belfast to make sure our GDP Code of Practice manual hadn’t been lifted by one of the banks in the past week or so.  We set our practice up over three years ago, telling people that Mediation was the way to solve the issues between the borrowers and banks.  For a long time, many professionals dismissed the idea with the reason being, banks don’t do deals, you are wasting your time.  We focused early on in the business to get a better understanding of banking policy and also work on our approach in terms of providing solutions to the significant problems out there and how we would present them to the institutions.  Our resolve was never broken throughout the early years of the business, and we stuck to our guns in trying to persuade the banks that it’s much better for all parties to mediate your way through the headwinds as opposed to gridlock and war between both parties. 

Thankfully in the last twelve months in NI our hard work seems to be paying off and we have reached a number of successful conclusions on impaired loan facilities and we feel have made a very positive contribution both to the borrowers position and ultimately the banks position.

My concern for ROI has always been high as there has historically been an obsession to ignore the problem and kick it down the road like the government has done with the sovereign situation.  However what we have seen in the past few months is that the banks in ROI have changed their approach to this issue and are now prepared to tackle the significant challenges out there.  There is no doubt that the pressure being directed at them by the IMF and the Central Bank has made an impact on their polices, which ultimately can only be a good thing.  So when I read the Irish Times this morning my thoughts would be that this new approach has to a be a welcomed development.

What we all need to do as an island is deal with the debt problem and let the country breath again.  We are financially and emotionally bankrupt and we need to identify the problems quicker, work on a solution and take action now – fairly straight forward.

So as I travel back to Belfast this afternoon and reflect on another very busy day in our Dublin office, just maybe the penny has dropped with Banks in Ireland that the idea of attempting to punish people and being confrontational with borrowers is maybe not the best way to deal with this crisis.

 

Author: Conor Devine MRICS  - Principal GDP Partnership