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Banks Threatening To Refuse To Refinance Loans In 2012 If Customers Don't Pay More Now.

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I was having lunch at an indian restaurant in the south of England today when I found myself listening to a conversation at another table of the otherwise empty restaurant. Although I didn't catch it all, and joined it half way through, it was clear that it was the bank manager talking to the owners of that chain of restaurants. And the news wasn't what the owners wanted to hear.

What the bank were saying is that although the restaurant had a low interest fixed rate interest-only mortgage on its properties (the restaurants I presume) fixed until the end of 2012, the bank was urging them to refinance onto a repayment mortgate also fixed but at a higher interest rate. Around 50% higher. The motivation the bank were giving to do this was a statement that if they did not agree to this new deal, then at the end of the fixed rate deal in 2012 the bank would refuse to roll over the loan. Which I presume would mean the bank would take possesion of the restaurants and sell them to the highest bidder to try to reclaim their capital.

The figures I heard were not trivial. Total debt £39 million, a payment (monthly interest I guess) to increase from £58K to £95K.

Needless to say the owners were not taken by this proposal.

If it was me, I'd have the engine warmed up and speedy off to the airport with a ticket to somewhere other than this god awful country lol.

Anyone else seeing similar things?

Edited by Thread Killer

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"A company is at its most profitable when it is in too small a premises and everybody is overstretched. The next step with larger premises and more staff often proves to be a disastrous move" ;)

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I was having lunch at an indian restaurant in the south of England today when I found myself listening to a conversation at another table of the otherwise empty restaurant. Although I didn't catch it all, and joined it half way through, it was clear that it was the bank manager talking to the owners of that chain of restaurants. And the news wasn't what the owners wanted to hear.

What the bank were saying is that although the restaurant had a low interest fixed rate interest-only mortgage on its properties (the restaurants I presume) fixed until the end of 2012, the bank was urging them to refinance onto a repayment mortgate also fixed but at a higher interest rate. Around 50% higher. The motivation the bank were giving to do this was a statement that if they did not agree to this new deal, then at the end of the fixed rate deal in 2012 the bank would refuse to roll over the loan. Which I presume would mean the bank would take possesion of the restaurants and sell them to the highest bidder to try to reclaim their capital.

The figures I heard were not trivial. Total debt £39 million, a payment (monthly interest I guess) to increase from £58K to £95K.

Needless to say the owners were not taken by this proposal.

If it was me, I'd have the engine warmed up and speedy off to the airport with a ticket to somewhere other than this god awful country lol.

Anyone else seeing similar things?

Did they give him a couple of free popadums?

That is interesting.

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Thats not so bad for £39 mill is it ? :unsure:

Anyway its a large increase and presumably businesses up and down the land are listening to the same "advice".

Not a great time to be a restraunteur and £39 million in the red.

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"A company is at its most profitable when it is in too small a premises and everybody is overstretched. The next step with larger premises and more staff often proves to be a disastrous move" ;)

Often fuelled by the MDs ego. ;)

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I was having lunch at an indian restaurant in the south of England today when I found myself listening to a conversation at another table of the otherwise empty restaurant. Although I didn't catch it all, and joined it half way through, it was clear that it was the bank manager talking to the owners of that chain of restaurants. And the news wasn't what the owners wanted to hear.

Sux on them for not realising that the bloke on the next table might be an HPCer! :lol:

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Thats not so bad for £39 mill is it ? :unsure:

Anyway its a large increase and presumably businesses up and down the land are listening to the same "advice".

Not a great time to be a restraunteur and £39 million in the red.

Not a great time to be a bank, and have a failing restaurant company owing you £39 million.

Perhaps I should re-phrase that to "Owing us £39 million.

Edited by otters

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Very much the same thing - except using a business loan to crowbar the customer out of a low rate home mortgage. Change the home mortgage or we'll wipe you out on the business.

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Did they give him a couple of free popadums?

That is interesting.

Well it did occur to me that that bank manager might have "accepted" the owner's kind invitation to have the meeting on site rather than at the offices of the bank, for just such a reason.

I did feel a little sorry for the banker though (not a lot sorry, just a little now) because he was doing his best to sugar-coat it all and be as diplomatic as possible. bless.

He said that in recent years banks' clients had had it "all their way" with low interest rates and easy credit, so it could be understandable that when things get tougher then customers would have to "have it the bank's way" a little. He said that customers might get into some difficulties as a result in the next few years but that the banks had argueably found themselves in difficulties in the past few years, and with the benefit of hindsight should have looked after themselves a little better back then.

(At which point I let out a slight involuntary guffaw mid-naan-bread, and put him off his stride a bit hehehe).

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39million for an Indian restaurant? Something doesn't sound right to me unless it's a massive chain.

Some of them have large BTL empires, especially in uni towns, and cities. The new tuition fees may unstick a few.

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Most Indian restaurants seem to be housed in ex-pubs so it's not as if the owners are the first people to have been done over by the bank.

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I was having lunch at an indian restaurant in the south of England today when I found myself listening to a conversation at another table of the otherwise empty restaurant. Although I didn't catch it all, and joined it half way through, it was clear that it was the bank manager talking to the owners of that chain of restaurants. And the news wasn't what the owners wanted to hear.

What the bank were saying is that although the restaurant had a low interest fixed rate interest-only mortgage on its properties (the restaurants I presume) fixed until the end of 2012, the bank was urging them to refinance onto a repayment mortgate also fixed but at a higher interest rate. Around 50% higher. The motivation the bank were giving to do this was a statement that if they did not agree to this new deal, then at the end of the fixed rate deal in 2012 the bank would refuse to roll over the loan. Which I presume would mean the bank would take possesion of the restaurants and sell them to the highest bidder to try to reclaim their capital.

The figures I heard were not trivial. Total debt £39 million, a payment (monthly interest I guess) to increase from £58K to £95K.

Needless to say the owners were not taken by this proposal.

If it was me, I'd have the engine warmed up and speedy off to the airport with a ticket to somewhere other than this god awful country lol.

Anyone else seeing similar things?

Hmm figures don't seem to add up. Interest rate going up to 2.93% from 1.785%. Thats a damn good rate.

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Hmm figures don't seem to add up. Interest rate going up to 2.93% from 1.785%. Thats a damn good rate.

If you borrow money to run a business it is never good news if your interest rate goes up by half as much again.

The restaurant will enter a death spiral now. It will have no choice other than to put the cost of a meal up by £2-3, as a result of which even fewer of the recession-hit locals will go there.

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Hmm figures don't seem to add up. Interest rate going up to 2.93% from 1.785%. Thats a damn good rate.

As I said it might be out of context. For example perhaps the figures I heard were for only part of his portfolio, or any other reason.

Maybe it was the weekly repayment figure :lol:

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Why would you trust a bank's verbal promise to roll over your loan in 2012 as they tried to blackmail you out of a contract they had signed with you previously?

Edited by Tiger Woods?

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Why would you trust a bank's verbal promise to roll over your loan in 2012 as they tried to blackmail you out of a contract they had signed with you previously?

You've reminded me of another part of the conversation I hadn't recalled: The new agreement would be fixed for 15 years. So it wouldn't need to be rolled over in 2012.

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You've reminded me of another part of the conversation I hadn't recalled: The new agreement would be fixed for 15 years. So it wouldn't need to be rolled over in 2012.

I nearly spat my tea out over that!!!! That really ought to win some kind of prize for inadvertantly forgetting incredibly significant piece of detail.

Less than 3 per cent for 15 years! That is a fantastic deal. Far far better than 1.5 % for 2 years. Christ I wish some awful banker would screw me over with that sort of deal. I'd have given him free poppadoms for life.

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"A company is at its most profitable when it is in too small a premises and everybody is overstretched. The next step with larger premises and more staff often proves to be a disastrous move" ;)

That quote applies very well to a business I know - getting screwed by RBS on rates and audits because they expanded too quickly with credit.

I supposed the quote was from someone with great authority, so I googled and got ONE hit! Expat forum in Spain discussing the collapse of a restaurant business, post #6, half way down the page:

http://www.andalucia.com/forums/viewtopic.php?f=22&t=25322&p=231648

Very wise, but it's a small ... ahem ... internet.

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  • 284 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • Even
      • up 2.5%
      • up 5%



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