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[font=Verdana, Arial]By: DAN WHITE
FIRST Active or EBS customers who fall behind in their loan repayments are at least 33 times more likely to be sued than those who borrow money from the major banks.
Last week it emerged that personal debt in this country is expected to hit a record 140 per cent of disposable income by the end of the year. Other financial institutions also look set to crack down on delinquent borrowers.
An exclusive Sunday Independent survey of motions listed in the Dublin Circuit Civil Court shows that, when it comes to chasing up defaulters, First Active and EBS are in a league of their own.
In the four months from the beginning of July to the end of October this year, 90 motions involving cases of financial institutions suing their customers were listed in the Dublin Circuit Civil Court. This was down by a quarter on the 121 such motions listed during the same period last year.
The most litigious financial institution is First Active. It was the plaintiff in 35 of the motions listed in both 2004and 2005. Almost 40 per cent of this year's motions involved cases where First Active was suing its customers.
EBS followed in second place with 31 motions listed last year and 28 this year. Between them, First Active and EBS were suing more of their customers than all of the other banks and building societies put together.
EBS's apparently litigious nature stands in stark contrast to its advertisements which emphasise the building society's mutual (member-owned) status.
However, none of the clearing banks was involved in more than a handful of such cases. Bank of Ireland was the plaintiff in just four of the motions listed this year and AIB in only three.
Irish Life & Permanent, whose Permanent TSB operations competes with Bank of Ireland for the top slot in the residential mortgage market, seems to have become far less litigious over the past 12 months with just 11 motions this year as against 25 last year.
These figures actually seriously understate the possibility of a First Active or EBS customer being sued compared to either a Bank of Ireland or AIB customer. Both First Active and EBS are relatively small financial institutions. At the end of last year, EBS had gross assets of €12.3bn while First Active had a total assets of €7.3bn at the end of June 2003, the last balance sheet it published before being taken over by Royal Bank of Scotland.
By comparison, Bank of Ireland's Irish retail banking operations have gross assets of €57.6bn while AIB's operations have €43bn of assets.
What this means is that, when you take account of their different sizes, First Active is at least 50 times more likely to sue one of its customers than Bank of Ireland while EBS is 33 times more likely to take one of its borrowers to court than AIB.
"Our lending criteria are prudent and responsible," said a First Active spokesman. "Where difficulties do occur, we would encourage customers to contact us and we will work them to draw up a revised payments schedule."
A statement from the building society declared that: "The actual number of EBS repossessions is low, with single digit repossessions last year, showing that generally conditions are worked out at the motion stage, which are satisfactory to both EBS and the home-owner."
The bad news for borrowers is that more financial institutions are likely to follow First Active and EBS's example. A report published last week by Goodbody Stockbrokers showed that personal borrowing will hit 140 per cent of disposable income by the end of this year, up from just 50 per cent in 1995.
Irish consumers now owe a mind-boggling €102bn and more and more borrowers are reaching the limits of their borrowing capacity
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