Any change in bank lending yet?

hinault

Speaking with several business owners, I'm told by each of them that the banks are still not open for business.

Has anyone here experienced differently?

Conversely a close friend of mine with PTSB, in retail banking, tells me that her branch are issuing loans.

Jet Black

Yes banks are still lending there is just stricter criteria.

hinault

Jet Black wrote: »

Yes banks are still lending there is just stricter criteria.

The banks are not lending, stricter criteria or not.
That was the point that I was making.

Solid business plans, put forward by clients with impeccable borrowing records are not getting access to funds.

Toots

Banks are lending, they just have stricter criteria, as Jet Black says. I work for a bank and I can assure you they are lending, in fact I know that 3 small businesses secured loans through my branch last week. It depends which bank you are talking about though.

hinault

Toots* wrote: »

Banks are lending, they just have stricter criteria, as Jet Black says. I work for a bank and I can assure you they are lending, in fact I know that 3 small businesses secured loans through my branch last week. It depends which bank you are talking about though.

In two cases, businesses banking with AIB were refused loans.
And in the other case, the business was refused a loan application by BOI.

Toots

As I said, their criteria are stricter. What might be a solid business plan to you or I, may not be seen the same way by an underwriter.

Jet Black

hinault wrote: »

In two cases, businesses banking with AIB were refused loans.
And in the other case, the business was refused a loan application by BOI.

It does not depend on the bank but the comapanys postion. If a company is in a good postion financially the bank will extend credit.

stepbar

hinault wrote: »

The banks are not lending, stricter criteria or not.
That was the point that I was making.

Solid business plans, put forward by clients with impeccable borrowing records are not getting access to funds.

You know the saying "Past performance is not indicative of future results". Of the business lending decisions I have reviewed in the past number of weeks (after a decline was made), they were 100% correct in each case (and in each case I didn't know the customer from adam).

Of course, going forward, a Credit Ombudsman will be coming on stream and he/she will be tasked with re-examining declined credit decisions. What it will achieve, I don't know. It will all depend on how liberal the banks are with disclosing specifc credit policy details.

hinault

Jet Black wrote: »

It does not depend on the bank but the comapanys postion. If a company is in a good postion financially the bank will extend credit.

Two of the three applicants are in an excellent financial position (no current borrowing, strong balance sheet with good working capital and liquidity ratio's).
The other company's financial position would not be as strong as the other two companies but their financial position is solid.

So, tell me again, why would all three companies, dealing with both major banks, be refused credit?

hinault

stepbar wrote: »

You know the saying "Past performance is not indicative of future results". Of the business lending decisions I have reviewed in the past number of weeks (after a decline was made), they were 100% correct in each case (and in each case I didn't know the customer from adam).

Indeed that's why you and your fellow bankers are banjaxed - because you and your ilk were giving loans out without looking to the future!

And incidentally - why is that you don't know the customer?
That is an interesting comment and quite revealing.

Seems to me that your ilk's unfamiliarity with individual businesses and business owners and their markets, contributes to the strife that you'be managed to get yerselves in to?

stepbar wrote: »

Of course, going forward, a Credit Ombudsman will be coming on stream and he/she will be tasked with re-examining declined credit decisions. What it will achieve, I don't know. It will all depend on how liberal the banks are with disclosing specifc credit policy details.

I won't hold my breath:)

stepbar

hinault wrote: »

Indeed that's why you and your fellow bankers are banjaxed - because you and your ilk were giving loans out without looking to the future!

And incidentally - why is that you don't know the customer?
That is an interesting comment and quite revealing.

Seems to me that your ilk's unfamiliarity with individual businesses and business owners and their markets, contributes to the strife that you'be managed to get yerselves in to?

My "ilk" eh? Nice :rolleyes:

Let me clarify, I reviewed the decision based on an application submitted (a different person in a different region submitted the application and had the relationship with the customer). Each decision made was 100% correct. So YES, I didn't know the customer; therefore my accessment was supposed to be in some way impartial.

You must think business people are "all singing all dancing know it all, all the information is realistic and correct sort of people", eh? Some people have an absolute distain for the people who are supposed to be helping them, and would happily demand facilities without providing a shread of information to back same up. Some couldn't put a business plan together if it struck them in the face.

Of course there are others who do what is asked, are realistic and have sustainable businesses. They are the ones who will get money, always have and always will. Its up to the businessperson to convince the banker that their proposal is worthy of being supported. You're selling a proposal. Unfortunatly, people in all walks of life got carried away and forgot about the fundamantals. Not exclusive to bankers either TBH.

hinault

stepbar wrote: »

My "ilk" eh? Nice :rolleyes:

Let me clarify, I reviewed the decision based on an application submitted (a different person in a different region submitted the application and had the relationship with the customer). Each decision made was 100% correct.

Just so that I have this correct.
You review loan applications submitted from the branch network?
Very interesting.

And actually quite revealatory : because it would be clear to me that you have no interaction with the applicant, you have no direct knowledge of the applicants business, but yet you adjudge the viability or otherwise of the application.

I don't expect you to agree with the issues I raise here because you're an employee.

But it would seem to me to be logical that the loan officer in the branch ought to be best placed to make a decision regarding the viability of a loan application.
Given the loan officers proximity to the applicant and presumably the knowledge of the local area and business levels in the local area.

Instead the person at the branch fills out the forms with the applicant, attaches whatever supporting documentation that can be mustered like a business plan, a copy of the latest set of audit accounts and copies of cashflows etc - and you then take the documentation and make a decision.

No wonder the country's banking system is shot.

That mechanism cannot work : either for the bank or the potential client.

Toots

hinault wrote: »

Two of the three applicants are in an excellent financial position (no current borrowing, strong balance sheet with good working capital and liquidity ratio's).
The other company's financial position would not be as strong as the other two companies but their financial position is solid.

So, tell me again, why would all three companies, dealing with both major banks, be refused credit?

Without knowing the exact details they submitted on their application, their previous banking history, etc etc, it would be impossible for anyone here to tell you why they were refused, other than our own idle speculation, which would be of no use.

I should also add that the posters on this forum who do work in banks are in most cases, not responsible for the credit decisions made by the banks, they're just regular joe soaps doing a job, trying to pay the bills. There's no need to get aggressive or confrontational. While debate is accepted/encouraged on this forum, there is a line.

But it would seem to me to be logical that the loan officer in the branch ought to be best placed to make a decision regarding the viability of a loan application.
Given the loan officers proximity to the applicant and presumably the knowledge of the local area and business levels in the local area

This is incorrect. The branch official has the decision to either submit the application or not. If the branch official felt the candidate was an completely terrible credit risk, or had a history of loan arrears etc, they could tell the client that it was their opinion that the loan is not the best course of action for them. In the ideal world, yes a branch official would be in the best position to make the decision. However, there is the human factor to consider also. The branch official may be biased (although they may be totally unaware of it) to grant a loan to someone who was perhaps not in the best position to obtain one. That is why a seperate team of underwriters review the loan application.

I don't expect you to agree with the issues I raise here because you're an employee.

Similarly, you would not be expected to know the inner workings of a bank's credit team, and how loan applications are processed and reviewed, because you are not (from what I gather from your posts) an employee.

stepbar

hinault wrote: »

Just so that I have this correct.
You review loan applications submitted from the branch network?
Very interesting.

And actually quite revealatory : because it would be clear to me that you have no interaction with the applicant, you have no direct knowledge of the applicants business, but yet you adjudge the viability or otherwise of the application.

I don't expect you to agree with the issues I raise here because you're an employee.

But it would seem to me to be logical that the loan officer in the branch ought to be best placed to make a decision regarding the viability of a loan application.
Given the loan officers proximity to the applicant and presumably the knowledge of the local area and business levels in the local area.

Instead the person at the branch fills out the forms with the applicant, attaches whatever supporting documentation that can be mustered like a business plan, a copy of the latest set of audit accounts and copies of cashflows etc - and you then take the documentation and make a decision.

No wonder the country's banking system is shot.

That mechanism cannot work : either for the bank or the potential client.

Since adam and eve, the system of approving a business loan has been as follows

- An advisor sends an application to an underwriter based on his / her interview with the customer. An application is submitted based on the information provided. The more you can provide the better the application. The customer leads this process.
- The underwriter either approves, declines or requests further information bases on the information submitted by the advisor. The advisor will drill down into detail stating why they feel the loan should be approved. The advisor can refuse to submit the loan in the first place.

The underwriter does not know the customer and bases his / her decision on the information presented and by using other systems.

THIS IS ALWAYS THE WAY IT HAS BEEN!!!!

BTW my job is not to review loan applications per se, I just happened to be involved in a review of a sample of declined applications.

Toots

Stepbar, you managed to phrase that much more coherently than I did! I think I need a coffee.:D

pavb2

My experience is we were buying a site for business premises sanctioned for loan last september. The deal was under negotiation for 7 years (long drawn out saga purcasing land from co council so price was fixed at 2002 valuation).

Just as we were about to close deal bank (BOI)reviewed & basically pulled plug we lost about 15K in fees,planning etc. and had taken out a pension with BOI as part of the deal. OK thats life & on reflection may be right not to proceed.

This year looking for finance €13k for new vehicle told by bank manager not to bother applying for finance as it would probably be turned down.
Phoned AIB finance & this was sanctioned within 2 hours. Asked garage if they could provide finance and guess what they could with BOI????

What ever else is happening we have now had 5 different managers with BOI in less than 18 months.

The business has been established 10 years & though times are tough we are surviving & will probably post better figures than last year due to cuts in overheads.

Toots

pavb2 wrote: »

This year looking for finance €13k for new vehicle told by bank manager not to bother applying for finance as it would probably be turned down.
Phoned AIB finance & this was sanctioned within 2 hours. Asked garage if they could provide finance and guess what they could with BOI????

That manager was talking through his hat from the sound of it. From what I can see through my branch there's much more car finance deals being done than motor loans, and AFAIK (am open to correction on this) this is the case with most branches, as the car can be repossessed if there is a finance agreement that goes too far into arrears, but a straight out motor loan would have no security at all.

namloc1980

hinault wrote: »

But it would seem to me to be logical that the loan officer in the branch ought to be best placed to make a decision regarding the viability of a loan application.
Given the loan officers proximity to the applicant and presumably the knowledge of the local area and business levels in the local area.

That would be a terrible way to run a Bank to be honest. "Given the loan officers proximity to the applicant" they would not at all be in the best position to adjudicate on an application. Unfortunately due to human nature bias would come into it. The person in the best position to make a credit decision is someone who is not biased and can make an impartial decison i.e. an underwriter/sanctioner.

pavb2

That's my point about the 5 different managers, if we had some sort of continuity the manager would have a lot more knowledge of our business & make a more informed decision.

BTW can any one explain why is there such a high turnover of managers

namloc1980

pavb2 wrote: »

That's my point about the 5 different managers, if we had some sort of continuity the manager would have a lot more knowledge of our business & make a more informed decision.

BTW can any one explain why is there such a high turnover of managers

Over the last 12-18 months the Bank's have had major restructures in their credit functions to deal with the new 'reality' of the present economic situation. Managers have been moved depending on their experience and in some cases becuase of their previous mistakes into different roles. Although I agree that 5 different managers in a relatively short space of time makes it difficult to build up a relationship

hinault

namloc1980 wrote: »

That would be a terrible way to run a Bank to be honest. "Given the loan officers proximity to the applicant" they would not at all be in the best position to adjudicate on an application. Unfortunately due to human nature bias would come into it. The person in the best position to make a credit decision is someone who is not biased and can make an impartial decison i.e. an underwriter/sanctioner.

OK I take your point to the extent that a bank official's personal relationship/knowledge about a customer, and their application, could become compromised.

However, "head office" because of lack of proximity to business, to the location, to the local environment in which the business is trading, cannot be best placed to make an informed decision.

And the point that some other posters here comes in to play - with the constant changeover of management staff - does not facilitate the customer wishing to pursue business opportunities.

namloc1980

hinault wrote: »

OK I take your point to the extent that a bank official's personal relationship/knowledge about a customer, and their application, could become compromised.

However, "head office" because of lack of proximity to business, to the location, to the local environment in which the business is trading, cannot be best placed to make an informed decision.

And the point that some other posters here comes in to play - with the constant changeover of management staff - does not facilitate the customer wishing to pursue business opportunities.

A lender from "Head Office", if they feel the need, will arrange to meet the customer (generally for larger exposures). In reality an informed decision is made on the basis of the numbers....if the numbers don't stack up then the lending shouldn't be done. Unfortunately a fair amount of lending was done over the past decade with little regard to the numbers but because someone was sound or 'knew' someone. An impartial decision based on the numbers i.e. repayment capacity, is the only way a lending should be done and it's best for both parties....the Bank minimizes the risk of giving out money which could become a bad debt....the customer doesn't get into a lending beyond their ability.

BankMan

I think it's important to point out - there are banks operating in Ireland where lending decisions are made at local level. Although increasingly there has been a shift towards centralised credit functions, this is not the case everywhere.

pavb2

What annoys me the most with BOI is we keep hearing how they are lending money and supporting small/medium businesses where my experience is that this is definately not true and as previously posted they have actually cost me money.

I think you are right that the shift is away from local the reason we left NIB to go to BOI was the fact that all decisions with NIB had to be passed by Dublin meaning all decisions were dragged out and had to be supported by much paperwork and reports a lot of which been sent previously.

The original switch to BOI with a local manager was a breath of fresh air so for us this centralization is a backward step

stepbar

pavb2 wrote: »

What annoys me the most with BOI is we keep hearing how they are lending money and supporting small/medium businesses where my experience is that this is definately not true and as previously posted they have actually cost me money.

What would you rather? Loose 15k or be stuck with a site you can't get finance for? Seriously, the fact that this site purchase rumbled on for 7 years is what I'd be p1ssed off about. Then again imagine you'd actually purchased the site and constructed the premises you needed..... would you have been able to afford it now?

pavb2 wrote: »

I think you are right that the shift is away from local the reason we left NIB to go to BOI was the fact that all decisions with NIB had to be passed by Dublin meaning all decisions were dragged out and had to be supported by much paperwork and reports a lot of which been sent previously.

The original switch to BOI with a local manager was a breath of fresh air so for us this centralization is a backward step

You might see it as a backward step, however it's the only way to ensure that lending standards are maintained. There has been always centralised decision making in the BOI. Why? because it best method of controlling risk. It's perhaps the only cost effective way of controlling risk.

stepbar

BankMan wrote: »

I think it's important to point out - there are banks operating in Ireland where lending decisions are made at local level. Although increasingly there has been a shift towards centralised credit functions, this is not the case everywhere.

Unless you were Fingers Fingleton. Sales and credit all rolled into one

T-Square

stepbar wrote: »

My "ilk" eh?

Some people have an absolute distain for the people who are supposed to be helping them

Helping people?

Your "ilk" wouldn't know what helping people was about,
if it jumped up and smashed you in the face.

The only thing bankers know about,
is helping themselves.

stepbar

T-Square wrote: »

Helping people?

Your "ilk" wouldn't know what helping people was about,
if it jumped up and smashed you in the face.

The only thing bankers know about,
is helping themselves.

Troll much?

hinault

stepbar wrote: »

You might see it as a backward step, however it's the only way to ensure that lending standards are maintained. There has been always centralised decision making in the BOI. Why? because it best method of controlling risk. It's perhaps the only cost effective way of controlling risk.

How much is BOI in to NAMA for?

Controlling risk : don't try to insult our intellligence.

stepbar

hinault wrote: »

How much is BOI in to NAMA for?

Controlling risk : don't try to insult our intellligence.

You've clearly shown you don't know much about what you're talking about so I'll leave it at that. Nite nite

BuffyBot

hinault, as you seem quite happy to answer your own question, not listen to the opinions of others who may know a lot more about the topic at hand, and not listen to them without throwing rudeness around I'm closing this thread.

If you can give me 1 good reason to re-open the thread, fell free to PM me. It would want to be good, however, because your behaviour to this point has been less than stellar.