Who do you believe - small businesses or our "truthful" Irish banks?

[Firefly]

Hi Firefly,

You have no idea how frustrating it is.
ONQ.

Hi ONQ,

I'll try and give my tuppence worth to the points you have raised.

You're right. Luckily for me the business capital my company needs amounts to a new laptop every 2 years.

Our big problem nationally is the public service wage bill and the cost of our health care - but tax from public servants help pay our way - we cannot simply "et them all go!"
ONQ.

Yes the public sector pay bill needs to come down further to balance the budget deficit, but I think bailing out the banks has hit us a lot harder. That is afterall why we needed the bailout from the ECB/IMF. Had the banks not needed to be bailed out (even with the budget deficit situation) we'd still be all right.

I agree that the banks are easy targets and that in and of itself this may be distracting us from an even bigger picture - the profits currently being made by landlords and retailers on the back of an economy in recession.
ONQ.

I'm not sure many retailers are making profits and if they are surely that's a good thing? As for the landlords...they can cling to their upward only rent reviews but if a tenant walks then the next tenant will be paying a lot less so I'd expect an aweful lot of deals are being done here.

You could add to this the criminals who simply haven't paid people what their owed, and those more unfortunate who cannot pay because of their own misfortune financially.
ONQ.

I'm not sure what you are referring to here and why it's relevant to your argument

But to back to my original point, I am not even talking about large business loans - I am talking about loans in the €20K-€300K that would allow persons who are in stable well paid employment to improve their home, buil a new home or upgrade their business premises.

Relatively small, low risk amounts when measured against turnover and annual profits, but they are amounts which they cannot produce at the moment.

I don't know why foreign banks aren't coming in here to offer to provide and service these loans - perhaps another poster could assist.

All i know is that people who would under any circumstances be considered "good risks" are not getting loans.

This practice is holding back this nation from recovering.

That's very hard to accept.

ONQ.

I can't speak from a business perspective, but in the private market I'm not sure if there's much demand for finance at all (I could be wrong). I think most people are worried about the future and are building deposits rather than seeking loans for house improvements. I personally think it will stay like this until well into next year. If we get a break from the ECB/IMF and there's more stability then people (with larger deposits) will start spending again..but nothing like the "good years".

 

[Jim2007]

I don't know why foreign banks aren't coming in here to offer to provide and service these loans - perhaps another poster could assist.

All i know is that people who would under any circumstances be considered "good risks" are not getting loans.

Well speaking as someone involved in the finance sector here in Switzerland I can say that our banks are not in habit of give out these kind of loans, especially to people who are already financially stretched. The typical Swiss bank makes most of it's income from asset management, not lending out money.

Here is how it goes over here - home ownership is below 60%, which is typical for middle Europe I think. To get a mortgage you need to have 30% of the market value of the property in hard cash and you can borrow no more than 2.5 times the salary of the principal income earner in the family. No right minded Swiss would ever consider borrowing money for home improvements, if he has not got the cash he would save up until he had and only then would he go ahead with the work. This is typical of middle Europe as far as I can see.

So the idea of say a Swiss bank setting up Irish branches to start lending out money would not fly, the shareholders would assume that the CEO has gone mad!

You must realise that most middle European banks to do not give out money as easily as Irish or UK banks. Over drafts are rear and credit card balances are normally expected to be paid off in full each month.


Jim.

 

[Jim2007]

This practice is holding back this nation from recovering.

That's very hard to accept.

ONQ.

What do you mean by recovery? If you mean the building industry and I have a feeling you do, then I think you will have a very long wait! The building industry growth was a bubble fuelled by cheap money, rather than wealth generating in terms of foreign income.

The recovery when it comes will have to be export driven and consist of true value added activities only when that is well established can you expect to see things like the building industry pick up again.

Jim.

 

[Chris]

I agree with everything Jim has posted. It goes to show how flawed the US/Irish/UK idea of building an economic foundation on credit fueled consumption is. Those countries where people have the strongest attitude towards savings are the countries that are in the least amount of trouble.

To add to the example of bank's and people's attitudes towards loans on the continent I can sum up the difference between Ireland and Germany as follows: when someone wants to buy a car in Ireland they go to the bank to look for a loan; in Germany someone that wants to buy a car goes to the bank to get a savings account.

Ireland's problems are due to too much credit fueled spending and investment. Increasing that further will only make things worse. The unfortunate thing is that there are too many businesses that should never have come into existence and a lot of them will have to close down. And entrepreneurs will have to come up with more of their own savings in order to set up businesses that are smaller than they would like. The last thing this country needs now is more credit.