ICS Building Society RIP 1864 – 2014

After 150 years the Irish Civil Service building society (known as ICS and a subsidiary of Bank of Ireland) is set to close. The letter delivered to the intermediary channel is on the left.

ICS started before the formation of the State and was subsumed into Bank of Ireland in the mid 1980’s.

The relationship with mortgage brokers was long standing, although in recent years there were a few developments which caused it to lose market share.

ICS first took brokers away from Bank of Ireland in c. 2009, previous to this brokers could deal with either a local branch (we dealt with now closed Westmoreland St. branch) or via ICS.

Then they reduced procurement fees, lastly they engaged in ‘dual pricing’ where it was cheaper to go to BOI than to ICS. All of these things were perhaps justified in the view of ICS but it didn’t mean people would then borrow from them and these things combined lead to less broker support …

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RTE Drivetime: What it’s like to be inside a debtors meeting

We were asked to talk to Drive Time on RTE radio about a borrower meeting we were at with a bank. This meeting was typical of the ones we regularly attend and also typical in both tone and outcome.

While we accept the bank have a collection agenda underpinned by the mortgage contract, their methods for obtaining a result are unnecessarily painful and that doesn’t make economic sense for any party involved.

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Best deposit rates in Ireland November 2009

The lenders offering the best deposit rates are listed below with the highest in each category being the one we have shown.

Best demand account: INBS 3.75% (up to €20,000), Halifax 3.75% (up to €10,000), Anglo Premium Demand 3.1% – no restrictions

Best 7 day notice: Anglo 7 Day Notice 1.6%

Best 1 Month/30 Day: PTsb 30 Day Notice 3.25% (min. €10,000)

Best 3 Month: Ptsb 90 Day Fixed 3.25% & Investec 3 Month Fixed 3.25% (min. €20,000)

Best 6 Month: Investec 3.25%

Best 9 Month: Investec 3.5%

Best 1 Year Fixed : Anglo 3.6%

If you want to consider your deposit options you can contact us on 01 679 0990, we don’t have deposit agencies with every lender listed in the top position, so in some cases we’ll have to send you direct but in any case we can still help you choose the best deal on the market. All rates are up to date as 9th November 09′ and are subject to change.

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What did bankers do wrong exactly?

Sometimes I have to wonder where the blame-game changed course and the organisations with no commitment to societal well-being were burdened with that responsibility, while those with an inherent responsibility then moved into the realms of innocence in the whole fiasco.

Imagine if you will, a bold child being held responsible for eating all the cookies and spilling all the milk, that of itself is easy, and when you go to met out ‘blame’ you might focus on the child, but if this all happened while their parents stood idly by do you still focus on the child or do you apportion significant blame to those who have the responsibility of guidance and direction? Indeed, any person who understand the nature of a child will realise that they don’t really consider the wider costs of eating all the cookies and spilling the milk (such as depriving their siblings of same, no milk for the tea etc.).

So with this in mind I’ll turn to banking, commercial banks don’t have a moral code …

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Banks: give you an umberella when its sunny and take it back when it rains

Samuel Clemens (aka Tom Sawyer) brought us the quote which is the title of this post, ‘banks give you an umbrella when its sunny out and take it back when it rains’, his simply worded expression held as true in Missouri of the late 1800’s as it does today.

Recently we had a client who is on an interest only mortgage, their circumstances have changed right when their interest only period was about to run out, naturally we suggested that they ask for a continuance of an interest only period, while this won’t work down the capital amount owed it will keep their cash flow alive and if you have to chose between owing more and being unable to pay then the former is preferable. Sitting in a pot might not sound great but it beats the raw fire.

The bank were happy to comply and they sent out a letter, it was at this …

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Forensic Underwriting, when is it ‘too much’?

Lenders will underwrite loans. That is part of the process, it is a natural and normal occurrence in finance, to underwrite, to ensure that you are researching the proposed deal to the extent that you can be sure that you are not taking a pointless risk, but when is it ‘too much’?

Traditionally an employee would be asked to give several forms of documentation as evidence of their position so that they could be considered for a loan. Normally this would have been a straight forward process, and one that generally works.

However, as of late we are seeing ‘forensic underwriting’ becoming more prevalent. The degree to which a lender wants to delve into a persons situation is rising beyond the traditional norms and in some cases we believe it is going well beyond the call of duty.

Let’s be frank, we need banks, who else will lend money to a stranger to buy an asset? Without banks it would only occur between people who have a lot of money personally …

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Forensic Underwriting, when is it 'too much'?

Lenders will underwrite loans. That is part of the process, it is a natural and normal occurrence in finance, to underwrite, to ensure that you are researching the proposed deal to the extent that you can be sure that you are not taking a pointless risk, but when is it ‘too much’?

Traditionally an employee would be asked to give several forms of documentation as evidence of their position so that they could be considered for a loan. Normally this would have been a straight forward process, and one that generally works.

However, as of late we are seeing ‘forensic underwriting’ becoming more prevalent. The degree to which a lender wants to delve into a persons situation is rising beyond the traditional norms and in some cases we believe it is going well beyond the call of duty.

Let’s be frank, we need banks, who else will lend money to a stranger to buy an asset? Without banks it would only occur between people who have a lot of money personally …

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Deflation, the low paid, and expansion of the tax base

Here are some statistics (taken from the SBP) showing that contrary to assertions that the ‘rich don’t pay enough tax’ that in fact they pay more than anybody else. Half of all tax income is paid by the top 6.5% of workers. So about 1/15th contribute 50%. One third of all tax collected comes from the top 2.5% of workers, thus 1/40th are paying 33%. It means that things such as the new 2% levy are merely punishing those who already contribute the most! I wrote about this before when talking about the Laffer Curve and how Ireland may be driving high earners out of its jurisdiction.

Sources have said that the Irish tax base is too dependent on a small number of people, so what would happen if we were to drive them out? The implications are severe.

…

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Irish Government bonds, what is happening?

Governments often have to raise money to achieve their objectives over the short and medium term, in Ireland we do this by raising bonds which is basically where a buyer (private or institutional) acts as the ‘bank’ for the state. The creditworthiness of our nation is currently the lowest in the Eurozone, below that of countries like Greece and Portugal. This means that we have to pay more interest to attract a buyer.

Today Moody’s (a rating agency) has put Ireland on watch for a debt rating downgrade (it means our debt will be considered less secure), and that means that we will have to pay even more in order to attract new investors for bonds. How this trickles down to the person on the street is simple, we’ll have to foot the bill eventually because the ultimate guarantor of state borrowing are the people in that country. The tools to achieve this with are higher taxes and less public spending, both equally unpopular.

For now we …

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