Judgments for bank debt have soared to €5bn


By Philip Ryan, The Irish Mail on Sunday May 27 2012

They won’t get money back, expert says

BANKS have lodged €5bn worth of judgments against customers in less than four years.

Figures exclusively provided to the Irish Mail on Sunday by credit management firm Business Pro Stubbs Gazette paint a stark picture of the task facing banks hoping to recover bad debts from struggling customers.

Figures exclusively provided to the Irish Mail on Sunday by credit management firm Business Pro Stubbs Gazette paint a stark picture of the task facing banks hoping to recover bad debts from struggling customers.

Since 2009, lending institutions have issued court proceedings against 1,642 clients in a bid to recover €4.9bn of loans.

Customers have fully paid off their debts on foot of court orders – amounting to a total of just €600,000.

Last year alone, banks issued €2.9bn-worth of judgments against 734 customers.

The €5bn of bad debt is spread across all financial institutions operating here and includes residential and commercial customers.

These figures do not include judgements lodged by NAMA and experts have warned that the level of orders could soar this year as the agency issues court proceedings against uncooperative clients.

In the first four months of this year, NAMA has lodged €357m worth of judgments.

Stubbs Gazette director Greg Connells said: ‘From what we have seen from NAMA so far this year, we could see an explosion in judgments lodged by the agency in the next 12 months.’

Banks lodge judgments against clients when all other efforts to have loans repaid have been exhausted.

These judgments can then be attached to assets owned by the customer, and banks may recover some of the debt by selling clients’ property or other possessions, depending on the terms of the original loan.

Mr Connells said the banks were unlikely to recover much of that €5bn they are currently chasing.

‘Even in five years’ time, the likelihood of these debts recovering to the kind of level where these judgements will be satisfied is negligible,’ he said.

‘We are seeing these judgments occurring to maximise the yield on these debts but there will still be an unprecedented level of write off.

‘Many of these judgments will never be satisfied in anything like full. They will at best be partially satisfied

‘The only way we could have a better outcome is if there was a rapid improvement in the global economy and a rapid improvement in asset prices, and we are just not seeing that.

‘All of these non-performing loans will be sold at a substantial discount to private equity companies who will then embark on the task of recovering whatever can be recovered.’

Earlier this week, Central Bank governor Patrick Honohan said he was not happy with the high level of mortgage arrears and called on banks to do more to reduce this debt.

The escalating problem of residential mortgage arrears was revealed in Central Bank figures released on Friday showing one in 10 people were more than 90 days behind in payments.

philip.ryan@mailonsunday.ie

Top Judgments Registered

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Padraic Boland
Address: Ballygarry, Carrowmore Lacken, Ballina, County Mayo
Amount: €57,505.51

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Alan Ryan
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Amount: €40,000.00

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Alan Torpey
Address: 8 Connawood Crescent, Old Connaught Avenue, Bray, Co Wicklow
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Gerald Ryan
Address: 10 Cornelscourt Hill, Foxrock, Dublin 18
Amount: €40,000.00

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