"we Wont Be Going Back To Easy Lending

[pajd]

seen pre-2007"

British Banking Association were interviewed on this mornings BBC Politics show (Northern Ireland version)

After that we had Paisley Jnr and other ploticians demanding the banks lend.

They can demand all they want

Edited February 13, 2011 by pajd

[jethrotull]

After that we had Paisley Jnr and other ploticians demanding the banks lend.

Lend prudently or just lend willy-nilly again? I prefer the new prudence. I wish the politicians had been prudent.

[Malthus]

seen pre-2007"

British Banking Association were interviewed on this mornings BBC Politics show (Northern Ireland version)

After that we had Paisley Jnr and other ploticians demanding the banks lend.

They can demand all they want

Shameful piece from the BBC, surprised Tom and Helen have the nerve to show their faces on TV

Imho the BBC would be better investigating the links between local politicians, reporters and the developers rather than complaining that the banks refuse to party like its 2007 again

[shipbuilder]

Just watched it on iplayer

http://www.bbc.co.uk/programmes/b007tjx7

about 33 minutes in to the programme.

Shocking that MLAs think that banks should continue to lend to builders who bought land at bubble prices and now are paying the price- so much for good business practice.

Helen Carson with her little homefinder paper -- over 60 pages in 2009 and now just 16 pages - perhaps it's because people realise that most advertising is being done on the internet now and her paper version and editorial are just not needed or wanted now. Her opinions on the bubble that would keep on inflating are coming back to haunt her.

One good bit was the shot of OBel in the dark with its few windows lit.

JUst noticed that the Scotland politics show and the welsh one was about FTBs and the banks must lend too. Concerted bias by a company which is paid through our taxes.

Did anyone notice the bit where Helen informed us that houses in Northern Ireland had never been more affordable? Tells us all we need to know.

Edited February 14, 2011 by shipbuilder

[PJ1977]

The kneejerk populism of our MLAs is depressing - I was on Henry Elvin's side when he last appeared at Stormont to tell the DFP committee that just because someone thinks they have a viable business it doesn't mean they actually have a viable business.

I'm all for banks to increase lending so long as it's going to people creating exportable goods and services and not jumped-up brickies.

[BelfastVI]

Just watched it on iplayer

http://www.bbc.co.uk/programmes/b007tjx7

about 33 minutes in to the programme.

Shocking that MLAs think that banks should continue to lend to builders who bought land at bubble prices and now are paying the price- so much for good business practice.

Helen Carson with her little homefinder paper -- over 60 pages in 2009 and now just 16 pages - perhaps it's because people realise that most advertising is being done on the internet now and her paper version and editorial are just not needed or wanted now. Her opinions on the bubble that would keep on inflating are coming back to haunt her.

One good bit was the shot of OBel in the dark with its few windows lit.

JUst noticed that the Scotland politics show and the welsh one was about FTBs and the banks must lend too. Concerted bias by a company which is paid through our taxes.

The issue is that the banks are not distinguishing between from those who did buy over priced land and those who didnt. Pattons are mentioned in the programme and they are certainly not one of the names that comes to mind when you think of those who bought expensive lands.

These banks were rescued by the Government/tax payer.

In many cases its as the Cork mad says; 'Its not me thats bust its thee'. This is quite true with RBS, who was going under if the Gov didnt step in. I can understand those long established companies, who paid millions in tax over the years seeing bailed out banks refusing to support viable companies. Dont confuse this with the completely over exposed companies that will never be able to recover. I totally understand why the banks dont wish to throw good money after bad.

[BelfastVI]

The kneejerk populism of our MLAs is depressing - I was on Henry Elvin's side when he last appeared at Stormont to tell the DFP committee that just because someone thinks they have a viable business it doesn't mean they actually have a viable business.

I'm all for banks to increase lending so long as it's going to people creating exportable goods and services and not jumped-up brickies.

This is a very simplistic view. We havnt been a great exporter since the shipbuilding and textile industries fell away in the last 40 to 100 years. Most of our other great exporters such as Shorts are propped up by the government to the max extent that the EU will allow. We have other exports such as quarry crushing machines and high quality quarry stone. buts thats construction related so the gov wont support it. The other great exporter we could have is agriculture but that has been totally decimated by a level of red tape that our competition just laugh at. The two largest UK wide customers the MOD and Education buy from Brazil. So not much hope there. Perhaps some time in the future, when the east have to raise, or even have a min wage we will be able to compete.

We have to get away from this notion that anything that is not exported is not worth supporting. Our food industry and our construction industries are large employers. At a time when everyone agrees that our private sector needs to expand we are being deprived of the supply of capital to do just that. We are also being smothered with that other great deflector, namely Red tape. I have been tole that there is more than one person employed in the M of Agriculture for every full time farmer in NI.

[2buyornot2buy]

The issue is that the banks are not distinguishing between from those who did buy over priced land and those who didnt. Pattons are mentioned in the programme and they are certainly not one of the names that comes to mind when you think of those who bought expensive lands.

These banks were rescued by the Government/tax payer.

In many cases its as the Cork mad says; 'Its not me thats bust its thee'. This is quite true with RBS, who was going under if the Gov didnt step in. I can understand those long established companies, who paid millions in tax over the years seeing bailed out banks refusing to support viable companies. Dont confuse this with the completely over exposed companies that will never be able to recover. I totally understand why the banks dont wish to throw good money after bad.

If I remember correctly I think pattons spent 5 million for one acre of land in ballymena market road. That was in 07. This seems pretty excessive to me.

[tinbin]

Did these construction companies not have extra cash flow in those days to help them out now in the bad times?

Exellent point ... of course they did. These construction companies are knee deep in the greed of it all as well as the politicans and banks. Most construction companies will have reduced their workforce dramatically and will have far less current overheads at present as they did back in 2006/2007. The only problem for them is that the big fat profits they made are being eaten into more and more and it can only be a matter of time before they have to take drastic action.

Not all Banks got caught up in the foolish lending, but people need to take responsibility for their own actions. We came through a period of time when monetary value went out the window. Credit cards got maxed up to massive limits, people borrowed money instead of saving ... & most adopted a carefree 'live for the moment' attitude and foolishly some banks supported this. Normal lending rules got ignored such as 'can this person actually afford this' simply because houses were taken as security with 2nd,3rd and even 4th charges applied. Banks like RBS & Halifax adopted the same approach and were at the forefront of this lending (amongst others) These Banks dont have the capital base to support the lending they do and instead they were borrowing from other banks thinking it couldn't go wrong .... until like humpty dumpty they came tumbling down.

I am glad it has went back to proper assessment of lending proposals, what do these politicians know about lending criteria??? They should stick to what they know best ... nothing

Edited February 14, 2011 by tinbin

[BelfastVI]

I would not argue with you on the point that viable companies should be supported by the banks. However I look at the prices in my propertynews mags from 2007 and 2008 and the prices that the construction companies were getting for the houses at that time - in some cases double what they are now getting for them.

Did these construction companies not have extra cash flow in those days to help them out now in the bad times?

Indeed they had. And for the 6 or 9 months that the prices went truly mad they didn't know how lucky they were. However most re-invested in more land. All business wish to continue and even expand. The luckier companies invested in other parts as they couldn't accept the valuations or asking prices for the land here. They are luckier to an extent but unlucky if they are also banked with the same banks who fuelled the land binge here (which is hard not to be). Whilst land here has collapsed totally in the UK it is perhaps only down 20%. But thats enough for the banks to call foul ' you are in default of your loan to value covenant' (even though that 20% was your own equity. They therefore want to treble your interest rate. Charge you tens of thousands of pounds each to offer you 3 month renewals of every facility you have. Double your site fine, even if the selling price of the house was covering everything. And cut the overdraft you have enjoyed (and paid for) over the last 10 year, to one third.

Now ask your self this. Do they do this to the companies who are skint or to the companies who have been both careful and prudent and have good reserves?

[BelfastVI]

If I remember correctly I think pattons spent 5 million for one acre of land in ballymena market road. That was in 07. This seems pretty excessive to me.

I stand corrected.

[BelfastVI]

Exellent point ... of course they did. These construction companies are knee deep in the greed of it all as well as the politicans and banks. Most construction companies will have reduced their workforce dramatically and will have far less current overheads at present as they did back in 2006/2007. The only problem for them is that the big fat profits they made are being eaten into more and more and it can only be a matter of time before they have to take drastic action.

Not all Banks got caught up in the foolish lending, but people need to take responsibility for their own actions. We came through a period of time when monetary value went out the window. Credit cards got maxed up to massive limits, people borrowed money instead of saving ... & most adopted a carefree 'live for the moment' attitude and foolishly some banks supported this. Normal lending rules got ignored such as 'can this person actually afford this' simply because houses were taken as security with 2nd,3rd and even 4th charges applied. Banks like RBS & Halifax adopted the same approach and were at the forefront of this lending (amongst others) These Banks dont have the capital base to support the lending they do and instead they were borrowing from other banks thinking it couldn't go wrong .... until like humpty dumpty they came tumbling down.

I am glad it has went back to proper assessment of lending proposals, what do these politicians know about lending criteria??? They should stick to what they know best ... nothing

I agree with you totally. People need to take responsibility for their actions and if you read Belfast Gazette you will see that alot are. However this responsibility should be born equally amongst all who acted irresponsibility.

Irresponsible lending, which in my humble view is the corner stone behind this. We can also blame the sophisticated investor or the gullable borrower who took up this irresponsible lending but if the lending was not available in the free and easy way then this would not of happened.

Its like allowing your children complete and free access to the sweetie jar and then punishing them for being fat (sorry if that's not PC but neither I or the spell check can spell obice).

The banks, in 3 out of 4 cases were completely bailed out by the relevant taxpayer. The people who, without question fired this money at the banks, who took the risk (now with a small or invisible r)to invest in the irish property market are being completely forgiven and repaid. The banks stand as judge and jury over every borrower. Where do they get this right now?

I too look forward to the time when banks allow 'proper assessment of lending proposals'. We are not there now and perhaps they will relax their current approach (which is very close to no lending at all) and move towards a sensible proper approach to lending.

[tinbin]

Its like allowing your children complete and free access to the sweetie jar and then punishing them for being fat (sorry if that's not PC but neither I or the spell check can spell obice).

[tinbin]

I too look forward to the time when banks allow 'proper assessment of lending proposals'. We are not there now and perhaps they will relax their current approach (which is very close to no lending at all) and move towards a sensible proper approach to lending.

I agree to an extent with this point because I cant help but feel sorry for the small business man who is probably feeling the pinch more than most. Banks are too quick to shut the door to them now with a simple response of 'a non-preferred industry'

There are so many different economic variables however that are influencing this now .. the difficulty is that (similarly to the Housing market) the Banks are adopting a hardline 'no stake - no deal' approach to lending money for business purposes.

Look at this way ... some guy raps your door and says,

'I've got this great business idea, it's going to make thousands ... I just need a lend of the money to get it started'

You ask how much they looking for and how much of their own money they are putting into it ... I guarantee the response will be nothing, or as little as they can possibly put into it. If it is so great an idea why are they not prepared to risk there own money.

I don't agree completely with the hardline approach taken by many Banks, but I do think that it is a necessary evil to change the mentality of the general Joe Public. They will always ask 'what is the most I can borrow?' A responsible lender should be there to educate them otherwise but this is a mentaility that still exists even today so I do wonder if any lessons have been learned sometimes.

Edited February 14, 2011 by tinbin

[BelfastVI]

I don't care how mad it got down south 750 to 1m Euro was not the price of an average house even at the top of the southern boom. In Sept 2006 our average house was £160 to £180k. I imagine their's was 200 to 250 Euro. Still mad but well below the value this Monaghan man was placing on the house he was looking at.

[yadayada]

I don't care how mad it got down south 750 to 1m Euro was not the price of an average house even at the top of the southern boom. In Sept 2006 our average house was £160 to £180k. I imagine their's was 200 to 250 Euro. Still mad but well below the value this Monaghan man was placing on the house he was looking at.

He didn't say average - he said wonderful. Average price at their peak was 311,000 euro, and it's now supposed to be 190,000 , but it's difficult to say when so few are selling.

[PJ1977]

This is a very simplistic view. We havnt been a great exporter since the shipbuilding and textile industries fell away in the last 40 to 100 years. Most of our other great exporters such as Shorts are propped up by the

government to the max extent that the EU will allow. We have other exports such as quarry crushing machines and

high quality quarry stone. buts thats construction related so the gov wont support it. The other great exporter we could have is agriculture but that has been totally decimated by a level of red tape that our competition just laugh at.

The two largest UK wide customers the MOD and Education buy from Brazil.

So not much hope there. Perhaps some time in the future, when the east have to raise, or even have a min wage we will be able to compete.

We have to get away from this notion that anything that is not exported is not worth supporting. Our food industry and our construction industries are large employers.

At a time when everyone agrees that our private sector needs to expand we are being deprived of the supply of capital to do just that. We are also being smothered with that other great deflector, namely Red tape. I have been tole that there is more than one person employed in the M of Agriculture for every full time farmer in NI.

Of course banks have to keep lending to businesses focused on domestic consumption but if the overall size of the NI private sector is to grow it needs to be export focused - domestic activities like construction, retail and catering really don't provide that much opportunity for transformational innovation/ productivity gains. As you suggest there is room for some gains in agrifood (which Northern Bank is strong in) though realistically mostly through consolidation.

What makes me so angry/ sad about the behaviour of the banks (and much of the business culture here) in the bubble years is that there was an enormous wall of cheap money available but very little found its way to people in

really innovative businesses. Instead the banks thought 'we'll lend to that guy buying fields in Fermanagh - we understand what he's at and sure if it goes wrong we still have the underlying asset.'

Billions spunked away on that mindset and yet in the credit boom years only two or three local tech businesses grew significantly and built an international reputation.

[BelfastVI]

Of course banks have to keep lending to businesses focused on domestic consumption but if the overall size of the NI private sector is to grow it needs to be export focused - domestic activities like construction, retail and catering really don't provide that much opportunity for transformational innovation/ productivity gains. As you suggest there is room for some gains in agrifood (which Northern Bank is strong in) though realistically mostly through consolidation.

What makes me so angry/ sad about the behaviour of the banks (and much of the business culture here) in the bubble years is that there was an enormous wall of cheap money available but very little found its way to people in

really innovative businesses. Instead the banks thought 'we'll lend to that guy buying fields in Fermanagh - we understand what he's at and sure if it goes wrong we still have the underlying asset.'

Billions spunked away on that mindset and yet in the credit boom years only two or three local tech businesses grew significantly and built an international reputation.

PJ, you use a lot of interesting words. I like 'transformational'. I am going to try and see if I can use that in the office today.