Why is it taking the Central Bank so long to approve Frank to issue mortgages?

trasneoir said:
Fast forward 5-7 years when NAMA2 is bailing out Frank along with the rest
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Frank is not an Irish entity. No non Irish entity was bailed out by NAMA. These delays have nothing to do with Risk as neither the CB nor the taxpayer will end up carrying any burden if Frank's risk appetite is too high!!
 
qwerty5 said:
I'd imagine setting up a new bank would be a lot more time consuming.
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On a point of detail, Frank isn't actually applying for authorisation as a bank and it won't be entitled to take deposits or hold client monies under the terms of its authorisation (if granted).

The "retail credit firm" designation only came into being in 2008 as a mechanism for ensuring that the various sub-prime lenders complied with the Central Bank's Code of Conduct on Mortgage Arrears - prior to that no authorisation was required by these lenders.

The form of authorisation that Frank is looking for should only take a matter of weeks to process. Really the Central Bank should only be concerned with ensuring that the principal officers of the company are fit and proper persons to operate a regulated business and that the company has the necessary policies and procedures in place to ensure compliance with the relevant Central Bank Codes.

While I have no insight into this particular application, at this stage you really would have to wonder why it is taking so long.
 
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44brendan said:
Frank is not an Irish entity.
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Well, a company called "Frank Money Limited" was certainly incorporated in Ireland - is this not the entity that is now applying for Central Bank authorisation?

Your broader point is well made - the Irish taxpayer will never have to "bail out" Frank if it gets into financial difficulties. Not because Frank isn't Irish but because it won't be a (deposit taking) bank.
 
A moot point Sarenco. While most of the foreign owned banks are registered in Ireland they did not come under the Irish bailout but rather that of their parent company's nationality.
 
It is irritating though that there is no updates coming forward from Frank on the matter. There's no activity on their facebook or twitter accounts, and apart from a refresh of the rates overview of other banks, no update on their website either.
You'd expect at least that they have some updates...
 
44brendan said:
A moot point Sarenco. While most of the foreign owned banks are registered in Ireland they did not come under the Irish bailout but rather that of their parent company's nationality.
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What's the moot point? You said Frank was not an Irish entity.

The covered institutions were all banks authorised by the Central Bank - the domicile of their shareholders was irrelevant. Frank is not seeking authorisation as a bank and therefore there is no reason for the State to ever bail it out - but that has nothing to do with its ownership or domicile.
 
Dropped a note to Frank Mortgages to ask for an update, and they responded very quick:

Dear N

Unfortunately we are not in a position to confirm product details or timing at this time, as we are still progressing through certain regulatory and other requirements. We will update everyone who has contacted us and will also be launching our live website with full information, when we are officially able to do so.

The Frank Mortgage
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Not exactly groundbreaking news but looks like they can't really say much more as they are progressing with whatever they are doing....
 
If they ran into trouble, the State wouldn't have to bail them out at all. As I understand it, they are a broker who match borrowers and investors along the lines seen in Denmark.

So if I borrow €500k and go belly up, it's an issue for Frank but more so their underlying investor.
 
The key point here is that there should be no delay in granting them a license.

I hadn't realised that up to 2008,they could have simply started lending and would not have needed a license.

Brendan
 
Sarenco said:
On a point of detail, Frank isn't actually applying for authorisation as a bank and it won't be entitled to take deposits or hold client monies under the terms of its authorisation (if granted).

The "retail credit firm" designation only came into being in 2008 as a mechanism for ensuring that the various sub-prime lenders complied with the Central Bank's Code of Conduct on Mortgage Arrears - prior to that no authorisation was required by these lenders.

The form of authorisation that Frank is looking for should only take a matter of weeks to process. Really the Central Bank should only be concerned with ensuring that the principal officers of the company are fit and proper persons to operate a regulated business and that the company has the necessary policies and procedures in place to ensure compliance with the relevant Central Bank Codes.

While I have no insight into this particular application, at this stage you really would have to wonder why it is taking so long.
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Hi Sarenco

I was thinking a bit more about this.

Frank, who wants to offer loans at 2.8%, have been waiting around 7 months so far for their Central Bank license.

Am I right in saying that if a vulture fund wants to buy a sub-prime mortgage book in Ireland, they can do so without any restriction other than their mortgage servicer e.g. Pepper having to be authorized?

Brendan
 
Brendan Burgess said:
Am I right in saying that if a vulture fund wants to buy a sub-prime mortgage book in Ireland, they can do so without any restriction other than their mortgage servicer e.g. Pepper having to be authorized?
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That's correct Brendan.

It's ironic that a measure that was introduced to benefit consumers is now apparently having the opposite effect in restricting competition.
 
Charlie Weston covers it in today's paper

Central Bank is 'delaying approval of new lender'

"
Mr Burgess said a vulture fund could come in and buy a mortgage book and not be required to be authorised or licensed by the Central Bank.

"Yet Frank Money wants to introduce competition, which we all agree is needed, and the Central Bank has been sitting on the application for six to seven months," Mr Burgess said.

"If they were serious, they would have this sorted out in a couple of weeks.

"It is hypocritical of the Central Bank to say we need more competition in the mortgage market and yet delay approving a potential new entrant," he said.

There was no comment when the claims were put to the Central Bank."
 
Brendan Burgess said:
I suspect that the prospect of this Bill being passed will frighten them into finally pushing through Frank's license. They they can claim that they were right all along that a new entrant would bring down mortgage rates.

Brendan
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Hi Brendan

RTE are reporting that you said the following at the AIB AGM:

"Mr Burgess said the high variable rates in the market here were preventing competitor banks from coming into the Irish market."

http://www.rte.ie/news/business/2016/0524/790505-aib-trading-update/

Is that correct?
 
Hi Sarenco

No. It's not correct.

Oddly enough, I had read the report and was struck by another error which they have since corrected.

I will contact them about that.

Brendan
 
Hi Brendan

I see RTE have changed that report to now read that you said the Central Bank was preventing competitors from entering the mortgage market.

As a matter of curiosity, did the relevant journalist indicate whether or not they were going to put this allegation to the Central Bank?
 
Hi Sarenco

Thanks for keeping an eye on it for me.

I just emailed them bringing it to their attention. They did not reply and I did not follow up.

They were simply reporting on the meeting.

I think that some journalist did put the overall issue to the CB who did not respond.

Brendan
 
Well, we're now over half way through June and there is still no sign of Frank Money getting its licence. At this stage, you would have to wonder if it's ever going to happen.:(
 
And still waiting. Meanwhile ulsterbank and aib are out the door busy, or so they have told me
 
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