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THE IMF has said that the progress of Ireland’s banks in dealing with troubled mortgage holders will have a make-or-break impact on whether Ireland can escape from its bailout on a long-term basis.
The latest quarterly report on Ireland’s bailout progress, published this afternoon, sees the IMF warn that the slow progress of the banks in returning to profitability is a key threat to Ireland’s ability to fund itself independently of the EU and IMF.
It also stresses that it is now vital for European leaders to follow through on their pledges to split banking and sovereign debts – asserting that high levels of debt for both the state and its banks compounds the difficulties that each faces in seeking independent financing.
The delay in dealing with customers struggling with mortgages, but who may not qualify for the new personal insolvency regime, means that households remain unsure about their immediate financial prospects while the loan books of the banks also remains open to question.
This means that households are unwilling to spend to any great degree, and instead increase the amount of their salary that they try to put aside, while banks find it more expensive to issue bonds because of investors’ unease about the scale of any mortgage losses they may incur.
The IMF says that progress in the mortgage sector could be crucial in helping to revive domestic demand by giving households a clearer picture of how much money they can afford to spend each month.
Achieving goals of making substantial progress on loan resolution “requires a dramatic shift from the slow progress on resolving NPLs [non-performing loans] to date,” it said.
While it is typical for banks to relay making deals with struggling borrowers, holding out for the prospect of an economic recovery that could help people to repay their loans, the accounting regime used by Irish banks “has facilitated banks recognising their loan losses at a slower pace than under other accounting regimes”.
The report reveals that the Central Bank’s code of conduct for lenders on how to deal with struggling mortgage holders will be reviewed by June, with a focus on trying to distinguish between households who are making tactical decisions not to make repayments, and those who are co-operating fully in attempts to stay on track.
The IMF staff consider a “thorough review of the [code of conduct] appropriate, as the emphasis shifts from forbearance to resolution, and notes in particular the need to ensure unsecured lenders are not advantaged in collections."
Elsewhere, the Washington-based fund suggests that a final decision on whether to apply some of the savings from the promissory note deal to the 2014 Budget - though makes subtle suggestions that some of the savings could be used.
It says a decision on the amount of consolidation measures needed in the next two Budgets should be made later in the year, when more is known about the impact of measures for 2013.
"This review should take into account that a buffer can be valuable to ensure the 2015 target can be safely achieved in the face of shocks," it says - while again warning off the prospect of any mini-budget if Ireland begins to slip behind its targets.
"Any significant additional consolidation to reach the 2015 deficit target should be deferred to 2015 where the adjustment burden is lighter," it says, while also noting that it may be easier politically to seek further adjustments after 2015 rather than when they are needed.
This hint about the prospect of political influence in the timing of budget corrections could hint that the estimated €1 billion in annual savings from the promissory note deal may be used to soften the edges of this October's Budget, which is currently due to impose adjustments worth €3.1 billion.
In the meantime, the IMF says, Ireland must continue to implement each year's Budget plans resolutely.
The strong out turn in 2012 improves prospects for 2013 but full implementation of budget measure remains necessary, especially concluding the proposed agreement with public service unions.Close monitoring of health spending is appropriate following overruns last year and successful introduction of the property tax is needed as a welcome broadening of Ireland‘s tax base.
The report meanwhile contains a suggestion that increasing loan losses at the banks - fuelled by a delay in getting unemployed people back to work, and therefore to make progress in paying off their debts - could see the banks absorb the buffers created through the government's recapitalisation.
"Were such a scenario to arise, Ireland‘s ability to rely fully on the market to cover its large post-program financing needs could easily become strained," the report warns.
The next round of banking stress tests, due in September, will also include an examination of the model used by banks to determine how much should be set aside as loan losses.
"These risks reinforce the importance of creating conditions for sustained economic recovery, through strong implementation of financial and structural reforms and careful design and execution of fiscal consolidation," the report states.
But even with rigorous implementation of these policies, the required balance sheet adjustments still leave Ireland vulnerable.
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Shock. Austerity sends economy into downward spiral. How much are we paying these clowns again?
I love austerity ; it is one of the major drivers of Historical change ; out with the old in with the new !
correction re comment above ; Bernatte ryan ; logged in with the wrong facebook account ; it is in fact me that loves austerity !
Did anyone really believe we would’nt need another bail out, of course we Will.
HIGGINS!!! What’s this all about? I’ve been telling you months to cop on!! That your party is stripping the state of assets through your attempted privatisations. Nationalize EVERYTHING now. Bins, toll bridges, oil. Wake up you dozy pack of ejits. My child’s future is in your hands… You best be making it a bright one. :-)
I read the document that was leaked in the Bundestag a while ago and it confirmed exactly what I knew all along. The Europeans have no confidence in this administration to deliver the structural changes nessessary. They believe they are an overpaid bunch of gombeens who care more about their pensions and perks and the continued gravy train
Sure they met Noonan didn’t they.
and they believe they should cut the fcuk out of public services and cut taxes for the rich bustards like the good tory/republicans they are not even competent enough to be…
These clowns belong in the fifties and have their heads stuck so firmly up their own arses they cant see what damage they are doing.
Austerity policies not working????? Who would have thought!
I cannot understand their pig headedness in continuing to look at unemployment in a stand alone capacity. Unenployment is a result of the current govt policy of reducing disposable income. No spare cash, no unnecessary purchases. Domestic economy contracts. Rocket science it aint.
Universal debt haircut for all non-investment mortgages.
That’ll relieve the pressure.
Fat chance of that happening.
Why non investment mortgages? What about those who got 110% mortgages? Those who live in million euro houses? The thousands of us not in mortgage arrears but in utilities arrears, credit catd arrears?
@Ciaran,
“Why non investment mortgages?”
Well that was borrowing money in order to speculate. People who did that need their heads read IMO.
“What about those who got 110% mortgages?”
“Those who live in million euro houses?”
“The thousands of us not in mortgage arrears but in utilities arrears, credit catd arrears?”
Well if their mortgages were non investment they’d get a debt haircut on their mortgages, which would help relieve the pressure.
@Mal, Jeez, ya think?
After much debating over this issue for the past 5 or so years, I can say – yes, I think. :-D
I appreciate, Mal, that with suggestions like this I am whistling in the wind. But I’d rather be whistling than standing in silence.
For sure.
People, forget the pedantics of all the repercussions of this ”bailout.”
The whole problem was caused by a criminal bailout being put on the people without their consent in the first place. Since then, we’ve had TINA (There Is No Alternative) rammed down our throats.
Direct Democracy Ireland understands the situation wholly and if elected, would immediately cease payments to bondholders and any more money being illegally taken from lawful Irish people.
Or you can go back to bickering about pedantics without focusing on the true nature of the issue. Choice is yours.
I love the way you depict anyone who mightn’t agree with your solution as “bickering about pedantics”, that’s a really good way of persuading people to your cause and getting them on side.
Well how else would you describe the pitting of decent folk against one another like teachers vs gardai, public vs private sector workers etc? Ultimately what’s going on in this country is a robbery. The only thing people seem to be consciously debating is about what specific people from the middle and lower classes to steal from.
Maybe take more money from the single mother of two college-going young adults? Or perhaps take money from the widower left to care after an infant daughter? Or best of all, take money from hospitals so the elderly and cancer patients (who can barely put up a fight) have no chance and are left on a trolley to rot.
And it’s not ”my” cause, whatever you mean by that. It’s the cause of equality in society. If that’s not everybody’s cause, well, you know what you are then.
By your solution I mean DDI.
“It’s the cause of equality in society.”
What do you mean by that? Do you mean that people will receive equally from society whatever their means? Do you mean that everyone will give equally to society whatever their means? Or do you mean both?
They do have a FAQ section their website. Maybe you should spend some time on that instead of trying to catch me out on something.
I’ll give you an example of DDI being able to implement fairness and equality though.
Everyone acknowledges that TD’s are overpaid and receive too much in allowances, expenses etc. (apart from TD’s that is.) 75,000 signatures would automatically mean a referendum on the issue. Reducing their basic salary from over €92,000 to €50,000 seems more than reasonable. But to reiterate myself, this is just an example and public discourse on the issue would hammer out the best deal possible (ie. no more TD’s receiving OTT salaries and instead that money going to healthcare or education).
“Maybe you should spend some time on that instead of trying to catch me out on something.”
Sorry I thought we were having a discussion. All DDI’s FAQ says is “Referendums for everything!”
I’m asking you what you mean by equality. And it seems you mean “Referendums for everything!”
Personally I think stepping away from representative democracy is a foolish idea. It would be better if we rediscovered Solon rather than abandoned him.
Damocles, what is your problem? You seem annoyed because you posted a comment earlier on how to fix our very large problem as a nation. Your suggestion would merely be a drop in the ocean of what is required to fix our country. You’re angry that I, not directly though, pointed that out.
Anyway, DDI’s FAQ page is very long and thorough. If you condensed all that down to ”Referendums for everything,” you clearly have the IQ of a potato or are just a very lazy person.
You don’t like stepping away from representative democracy? Good thinking, because it’s worked soooooo well for us so far! Look at how those crazy brankrupt Swiss are getting on with direct democ… oh hang on.
I don’t have a problem. But if you think the events of the last few years boil down to “Representative Democracy caused the financial crisis and a referendum approach will cure it.” you clearly do.
And I wasn’t suggesting that a debt hair cut would cure the crisis, merely that it would relieve the pressure. Anyone who believes in single causes or single cures is an utter moron.
No need to be putting words in my mouth Damocles or for you to lose the head either :)
I’m not saying DDI is THE single cure for the crisis. But it is THE best facilitator/service to implement the cures that are required to fix the crisis.
And judging by the red and green thumbs, I’d have you smoked in direct democracy so I understand why you might like the same old representative stuff to stay ;)
I hope you see the error of your ways in this little debate and realise how representative democracy has become obsolete.
I think he might mean semantics, although it’s hard to tell amongst the general incoherence. I don’t imagine there are many bondholders left for us to refuse to pay. That shop has sailed long ago.
@Patrick, I see you’re a true believer. Well having lived through the continuous coming of the UKIPpers and Nigella Farago on the DT I know better than to get between a man and his political rebirth. Have fun. I can’t agree with the idea for a number of reasons but there’s absolutely no point in trying to even start to discuss them with you.
@Sheik Yahbouti, I thought he meant arguing over the details. But your explanation may work as well. Salaam Aleikum.
@Damocles
Ah, you read the Torygraph, it all makes sense now!
Your comparison between UKIP and DDI is totally ridiculous. UKIP are a party of the same system. DDI is a politicial service that is going to change the system for the betterment of the people. Hasn’t treated the Swiss too badly now has it?
As the second president of Mensa, Buckminister Fuller, once said “You never change things by fighting the existing reality.
To change something, build a new model that makes the existing model obsolete.” And that’s precisely what DDI are doing.
To be honest, your pathetic, futile fight to maintain the current system is akin to the conservationism which tried to maintain slavery and prevent universal suffrage.
It’s a pity you can’t argue any of my points but I suppose that’s impossible considering the system you seek to maintain is obsolete which is fast becoming aware to the people.
@Sheik
I don’t normally reply to trolls on here but your argument has such a large gaping hole in it, I couldn’t resist. We will continue to be paying money out the bondholders for the next few decades. This can be stopped with DDI.
Also, before erroneously calling my argument incoherent, you could brush up on your spelling a bit :)
Go dig out a copy of the Peter Cook film “The Rise and Rise of Michael Rimmer”. It sums up the reality of survey-driven DD politics fairly succinctly.
“Ah, you read the Torygraph, it all makes sense now!”
Petty ad hominem attack.
“Your comparison between UKIP and DDI is totally ridiculous. UKIP are a party of the same system. DDI is a politicial service that is going to change the system for the betterment of the people. Hasn’t treated the Swiss too badly now has it?”
You’ve misunderstood my comparison with UKIP. UKIPpers inhabited the DT comments section and twisted nigh on every discussion to UKIP with a fervour of belief that defied normality. I get the impression that many DDIers are taking the same route. The Journal is to DDI what the DT is to UKIP. If it’s any relief to you the DT did eventually start to take UKIP slightly seriously after a couple of long long years, maybe the Journal will too.
“To be honest, your pathetic, futile fight to maintain the current system is akin to the conservationism which tried to maintain slavery and prevent universal suffrage.”
Straw man argument.
“It’s a pity you can’t argue any of my points but I suppose that’s impossible considering the system you seek to maintain is obsolete which is fast becoming aware to the people.”
It’s not that I can’t, it’s more that I won’t, it’s pointless arguing with a true believer it would be akin to me trying to persuade an Atheist to Christianity (or vice versa) in this forum. I’m more than happy to leave you to it. Tootles!
@Nikolas, downloading it now. TPB has it.
Well no offence but media like the Torygraph is part of the reason why we’re in this mess today.
Haha, you ”won’t” argue my points. If you believe I’m so susceptible to new ideas, why don’t you try and convince me that the old system is better and we can fix our crisis somehow through that? DDI’s time has come is all I’m saying and you could at least try and argue that point.
If I’ve insulted you in any way that made you feel compelled to respond like that, I’m sorry, but it’s pretty clear that representative democracy just isn’t working anymore.
The IMF has said that the mortgage arrears will have to be addressed for Ireland to exit the bail out. And thats exactly what the govt has in mind. Alan Sahtter has introduced a Bill to Dail Eireann and no doubt it will be passed the party whip and it will give green light to banks to go ahead with repossession proceedings again. I have no doubt in my moind that they are goign to be ruthless – why cos banks need that money and last thing Ireland govt want to od is go back to the EU – why cost Ireland was a bad boy and unilaterally breached the loan agreement – and failed to pay on the promisoory note instead did debt swap with central ban and decided to restructure the loan.
Do u thing any of u cld do that on your loan with your bank ?
Exactly Mary. People need to wise up.
What future are we leaving?
Mary,
Sounds to me that the IMF are saying the banks are not applying standard accounting rules to mortgage losses, ie writing bad debts off – the banks are going for the draconian approach instead, which may or may not suit them, but it sure as shiote wont help the economy as a whole improve.
FG is just looking after the banks
a g a i n.
SHAW HIGGINS….We would like a repost please???? Na run away when news is bad.
Would you mean Riposte, by any chance?
Oh yay the gravy train has docked again. If it wasnt for the work that has been done in the last two years we would be worse off and anyone who says otherwise is a fool and is blinded by hatrid and party politics.
We have growth for the first time in 5 years instead of 1000 jobs being lost a month there being created. Instead of your small shops closing theres more opening .
So would someone like to tell me whats not working because Im seeing a totally different picture.
A.
I’d like ro know where u live Adam. Where i live in a rural town and the nearest large town,where i work has nothing but shop closures. Week after week different shops are closing. My kids like to guess which shop will be gone on the next visit to town.
Same here Tracy. Adam open your eyes look what has happened to nearly every country the imf have went into
Adam, care to provide some proof for this wonderful fiction, or are u just reading FG party notes :)
Adam is a baby FG’er guys so expect not to have a sensible discourse here.
Adam; this Government are illegal and have no authority to collect tax , so it is totally irrelevant what any “Members of the Government”say, in my opinion!
Adam, seriously man. Are you really that blinkered?!
patrick c devaney – Parick wrong. wrong wrong. F Gael said the same thing and more as well as labour BEFORFE the elections. And look what happened/. And why – cos B Cowen entered inot an agreement for the 67 billion and the term was one of the term was THE IRISH TAX PAYER WILL FUND THE COST OF CAPITALISATION OF THE BANKS FURTHER DETAILS OF WHIHC IS SET OUT IN A MEMO OF UNDERSTANDING SINGED BY M inister for Finance and ors on 17 5 11 and which anyone can access on Dept pof Finance website.
The banks to be capitalised in the memo of understanding according to timescale and tersm set out in it – be end of 2013 – are :
bANK OF iRELAND
aib
iRISH lIFE AND pERMANET.
Irish Nationwide and Anglo IRISH bANK (MERGED)
and
EBS.
Well now we no where IBRC is – in liquidation and loan installment payment kicked down the road NOTED not Blessed by ECB . Bol Bold Bold Ireland . Can u remebr what made Cyprus go back to EU. The ECB said trhey would stop sending money to banks . Banks were insolvent to beging with. At least this time EU said that one of them banks would be wound up before any money paid over but not with us – and govt decided theyb wld continues to try and keep angl on road and current govt cemented it by signing memo and downdrawing loan . so we are further bound .
But under art 29 5 2 of Bunreacht na H’Eireann no intnl agreement involving a charge on the public finds will be legally binding on this state unless the dail approves the terms .
That Memo of understnaidn was never laid before the dail for its approval or rejection.
To Patrcik Delaney and DDI please dont try to delude either yourselves of the public by declaring that u can jusr rip up the bonds and – this country is in debt because of this deal which I say is not legally binding on this state until and unless the term that the irish taxpayer will fund the cost of capitalsiiang banks to the highest intnl standards is approved by dail eireann and I suggest now that anyone reading this lobby and tell their td in no uncertain terms it is ther duty and mandate to look after the central fund that we all subscribe to and they rely on for pensions salaries and expensews and that u likewise want that Memo of Understanding laid before the dail and if govt does not do so that the same TD applies to the high court for and order to comple it do so and a decalertion that the agreement does come with in are 29.5.2.
The Govt has been goign on for some time now about ireland as a special case and looking for a write down of the national debt to the EU Countries because of the good behaviour (???) BUT last repor was that Mrs Merkel casting cold water on it.
What I am trying to say is Govt needs the dail to raise its constitutional powers over the parapet – and only peopel with locus standii are TDs – TDs need a majoirty vote in dail all it takes is one to go to the courts – in order to comple the otehr parties to that agreement – EU Clountries – to put that term back on the table again.
M Ward.
2.
REMEMBER PATRICK the Greeks ripped up the bonds and they still had to go back to the EU and comply – its not the bondholders , aint the banks , its the people – and now in thsi country the govt hell bent on :
1 Cash into banks – by repossession or insolvency arrangements
2 Central coffers by reofrm of croke pk agreement and prop tax and more.
Remember alos this country has drawn down somehting like 90 billion from the eu loan fund and IMF fund – that is DEBT but i say was that agreemetn legal.
And the only peol,le who ahve legal authority to raise that question are our TDS
About time they worked for their money
That my view
And only people thye nedd to be relected is U .
mw
ps I f u are living in estates sugest u go to residents assoc set them up and orgainse locally to lobby , do it thru your trade union your local branch , your local GAA Club, your local IFA branch, Local ICA branch local Unislim Gym memebrship lots of opportunities and chances only a matter of looking around for htem and using them – aim to get message to them ie TDs.
Don’t expect a reply from any of those blind lying snakes. They just got told Mary.
My point is proven thank you .
Good man ad …keep smoking the bluestuff
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