Why can't I get a loan from another country?

This probabaly qualifies as 'shower thoughts' or 'thinking out loud', but is there a reason why I, as a born and bred Irish man, can't get a loan from a bank up north? or in Poland? Or Greece (etc. you get the idea).


Is there a reason why this hasn't taken off? I presume that if a bank in Athens, for argument sake, has personal loans at 2%, then they'd clean up big time doing personal loans? Same applies if their mortgages, student loans, etc. have lower rates?

coylemj

Any foreign bank that decides to do business here is not going to offer those kinds of rates, they will charge what the local market is prepared to bear. That’s why the notion of ‘competition’ doesn’t apply in the case of car insurance, they all charge up to the levels they can get away with.

Remember also that during the boom times, a lot of foreign banks entered the Irish market. Only to withdraw a few years later with massive bad debts. They’re not coming back any time soon.

wpd

In my opinion it is a huge failing of the EU principles that you cannot borrow from an European bank for property

I think in mainland Europe this is not such an issue??

Henry Ford III

Authorisation would be an issue. Security might be another.

p.s. There's plenty of competition in motor if you know where to go.

Wizard!

They make the game, they make the rules. Simple as that.

zephyro

wpd wrote: »

In my opinion it is a huge failing of the EU principles that you cannot borrow from an European bank for property

It is but unless the legalities are harmonised it ain't gonna happen, no German bank will lend at their standard rates here given the crazy legal protections for mortgage holders.

Guy:Incognito

I doubt companies want the hassle of trying to chase defaulters in foreign countries.

If you were a German mortgage company say, why the **** would you lend to an Irish person when the prospect of getting your asset , should they just decide to stop paying said mortgage, is so difficult and drawn out?

corks finest

Every Nigerian prince asks the same question

Alrigghtythen

KKV wrote: »

This probabaly qualifies as 'shower thoughts' or 'thinking out loud', but is there a reason why I, as a born and bred Irish man, can't get a loan from a bank up north? or in Poland? Or Greece (etc. you get the idea).


Is there a reason why this hasn't taken off? I presume that if a bank in Athens, for argument sake, has personal loans at 2%, then they'd clean up big time doing personal loans? Same applies if their mortgages, student loans, etc. have lower rates?

They cant repossess the house easily if you default

Jinglejangle69

Alrigghtythen wrote: »

They cant repossess the house easily if you default

Bingo.

Ireland has the lowest repossessions in the EU.

If Irish banks can't get it done.

Then I don't blame others from outside getting involved.

Jim2007

Alrigghtythen wrote: »

They cant repossess the house easily if you default

Jinglejangle69 wrote: »

Bingo.

Ireland has the lowest repossessions in the EU.

If Irish banks can't get it done.

Then I don't blame others from outside getting involved.

They can't repossess very easily in most of Europe, yes if they go through the entire process they stand a better chance of success else where than Ireland.

But it is not really an issue. The mortgage game is very complex and requires a lot of knowhow and a sizeable business to make it worthwhile. Generally speaking banks have not been successfully in entering the cross border mortgages market and consequently shareholders, particularly institutional shareholders do not look kindly on board's of directors who move in that direction.

Ireland is particularly disadvantaged in this respect because there really is not much else to make profits out of in Irish banking, so the country is very unattractive for foreign banks.

Marcusm

KKV wrote: »

This probabaly qualifies as 'shower thoughts' or 'thinking out loud', but is there a reason why I, as a born and bred Irish man, can't get a loan from a bank up north? or in Poland? Or Greece (etc. you get the idea).


Is there a reason why this hasn't taken off? I presume that if a bank in Athens, for argument sake, has personal loans at 2%, then they'd clean up big time doing personal loans? Same applies if their mortgages, student loans, etc. have lower rates?

No reason why you can’t if they are willing to give it to you. Realistically, however, no bank will grant a single cross border loan as they have no practical ability to verify your credit worthiness, have procedures to deal with late payments and (ultimately) enforcement if you default. These are only cost effective when you have the apparatus to do them at scale. He problem with the Irish consumer market is that any enforcement is reliant on slow court processes, an absence of proper civil enforcement (commercial bailiffs rather than state Sherrif) and, for property loans, an absence of effective repossession capabilities.

dotsman

Wizard! wrote: »

They make the game, they make the rules. Simple as that.

Far from it. The better banks would love to be able to easily build custom from other countries. However, it is far from simple to do so.

Marcusm wrote: »

No reason why you can’t if they are willing to give it to you. Realistically, however, no bank will grant a single cross border loan as they have no practical ability to verify your credit worthiness, have procedures to deal with late payments and (ultimately) enforcement if you default. These are only cost effective when you have the apparatus to do them at scale. He problem with the Irish consumer market is that any enforcement is reliant on slow court processes, an absence of proper civil enforcement (commercial bailiffs rather than state Sherrif) and, for property loans, an absence of effective repossession capabilities.

This is on the right path, however, it gets even more complicated than this.

There is a ridiculous amount of regulation in each individual country. If a foreign bank wants to lend in Ireland, it would need to do so in accordance with Irish regulations. This would be a tremendous cost fro the bank to set up (their systems would all need to be configured), their staff, at all levels, would need to be trained and remain experts on Irish regulations and codes etc. On top of this, the foreign bank would need to attain expertise on the Irish property market, debt collection firms, legal firms, court processes etc.

On top of this, different countries have different will have different competitive markets. What I mean is, what may be a product/service that is in demand or considered good value in one country may have little demand or be considered expensive in another.

All this is why, typically, when a bank expands into another state, it simply sets up a new (or buys an existing) bank in that state. AIB Group has AIB ROI (for the republic), First Trust (for Northern Ireland) and AIB GB for the rest of the UK. Each unit is pretty much independent (some shared back-end service between First Trust and AIB GB). As a customer, all 3 are completely separate. Being a customer of one entity does not make you a customer of the 2 others.

Make It Real

Institutions are free to lend (or not) where they see fit.

So, it probably doesn't fit with their business model, the cost of setting up an operation in a given country and the particular difficulty in recovering money owed to them if it goes wrong.

If there was an opportunity to "clean up big time" you can be sure one of them would have done it.