our Irish Commercial Bulletin June 2014

Report
JUNE 2014
Andrew Freeley has joined Specialist Mortgage Services (SMS)
as managing director.
HML Ireland managing director David Kelly has appeared on
RTE Morning Edition to talk about tracker mortgage
repayments.
The European Central Bank has cut the base rate to 0.15%.
HML News
Andrew Freeley has joined
Specialist Mortgage
Services (SMS) as
managing director.
HML has appointed Andrew Freeley as
managing director of Specialist Mortgages
Services (SMS), a HML subsidiary.
Freeley has joined SMS at an exciting time for
the company. SMS provides regulated
mortgage advice in the post-Mortgage Market
Review (MMR) world, legal title management,
mortgage shortfall debt recovery and marketleading advanced analytics services.
He brings with him 15 years of experience in
the financial services sector, including head of
strategy and planning for UKAR and strategy
director for Skandia Investment Group. Freeley
started his career as a management
consultant for Ernst & Young, delivering major
strategic change programmes for financial
services clients.
“We are very excited by the growth potential of
SMS, which adds a new dynamic and suite of
capabilities to HML’s business in both the UK
and Ireland. Since the launch of the MMR, we
have experienced a high volume of calls from
customers who want mortgage advice,
demonstrating the importance of regulated
advice in the post-MMR world. SMS efficiently
delivers this for our clients and ensures
customers receive high-quality advice to help
them achieve appropriate outcomes in a fair,
transparent and well-governed manner.
“Our market-leading advanced analytics
capability supports HML’s service to clients
and also provides expertise to a range of other
clients requiring analytics to help drive
customer strategies and collections
effectiveness, an example of which is our
focus on recovering mortgage shortfall debt.
“With legal title management, SMS, coupled
with HML’s expertise in mortgage servicing,
has the capability to provide an end-to-end
mortgage management solution for clients
wishing to invest in mortgage portfolios. Over
the coming months, SMS will play an
increasingly important role in HML, delivering
diversification and growth.”
Andrew Jones, chief executive officer at HML,
commented: “I am delighted to welcome
Andrew as managing director of SMS. His
wealth of experience in the financial services
sector is a great asset and will enable us to
further develop SMS, both in the UK and
Ireland. There is certainly a lot for lenders and
mortgage portfolio investors to consider at the
moment, and HML together with SMS have the
experience and track record of delivery to
support clients and their customers through
this period and beyond.”
Andrew Freeley,
managing director of SMS
HML News
Ireland shouldn’t dwell on
the past in order to move
forward.
HML has kick-started the
debate in Ireland regarding
tracker mortgages.
David Kelly made the comments following the
Federation of International Banks in Ireland
(FIBI) annual conference, for which HML was
a sponsor.
Despite the European Central Bank base rate
cut to 0.15% - which could bring the average
monthly mortgage repayment down by around
€15 a month - Mr Kelly has urged mortgage
borrowers to keep up the same level of
repayments in order to help chip away at the
capital they owe.
Key speakers included the Taoiseach Enda
Kenny, Neil Ryan from the Department of
Finance, Patrick Brady from the Central Bank
of Ireland and Santiago Fernandez de Lis from
Spanish bank BBVA.
The event focused on three main topics:
He described now as a "window of
opportunity" for mortgage borrowers to pay
down their mortgage, as the low base rate "will
not stay low forever".
1) The impact of the Single Supervisory
Mechanism (SSM) on Ireland
2) Digital developments in the banking sector
3) How Ireland is coming out of a trough
Mr Kelly’s comments were reported widely in
various Irish newspapers, including the Irish
Independent and he was also interviewed on
RTE Morning Edition.
Mr Kelly said: “With a banking enquiry planned
for later in the year, there will no doubt be a
firm focus on the previous mistakes of the
banking sector. However, we need to
remember the progress the country has made
over the past few months and avoid dwelling
on the past. Sentiment towards banks may
remain negative for some time to come, but we
have to ensure positives aren’t ignored, such
as the recent news about some banks
returning to profit and lower arrears levels.”
You can watch this video by playing the
presentation as a Slideshow or, alternatively,
by clicking here.
Mr Kelly also stressed: “The domestic and
international banking sectors have a strong
role to play in contributing to Ireland’s
recovery. We should not forget the lessons of
the past, but we should focus on how best we
can apply these lessons in the future.”
You can read Mr Kelly’s article in full here.
HML Ireland Update
Consumer Price Index (Central
Statistics Office)
MAY ‘14
APRIL ‘14
MARCH ’14
0.4%
0.3%
0.2%
European Central Bank (ECB)
Base Rate
JUNE ‘14
MAY ‘14
APRIL ‘14
0.15%
0.25%
0.25%
Unemployment Rate (Central
Statistics Office)
MAY ‘14
APRIL ‘14
MARCH ’14
11.8%
11.8%*
11.8%
Average National House Prices
(MyHome.ie)
Q1 ’14
Q4 ’13
Q3 ’13
Down 0.7% from Q4
Down 0.9% from Q3
Down 1.4% from Q2
€187,736
€189,086
€190,790
Arrears
(Central Bank of Ireland - CBI)
Q1 ’14
Q4 ’13
Q3 ’13
PDH – total
132,217
136,564
141,520
PDH – 90 days+
93,106
96,474
99,189
BTL – total
39,361
39,250
40,426
BTL – 90 days+
31,048
30,706
31,227
Home Repossessions (CBI)
Q1 ‘14
Q4 ‘13
Q3 ‘13
PDH
1,116
1,014
1,050
BTL
568
503
516
Date reflects what the statistic was during that period, rather than when the statistic was published
* Figure has since been revised
Industry Statistics
Consumer Price Index
The CPI in May was 0.4% higher than the
same month in 2013. It increased by 0.1% on
April, with notable upward pressures coming
from the education (4.5%), alcoholic
beverages and tobacco (3.4%) and
miscellaneous goods and services (4%)
sectors.
This was partially offset by declines in
communications (-4.7%) and clothing and
footwear (-3.5%).
ECB Interest Rate
The ECB base rate has been cut to 0.15%.
Mario Draghi, president of the ECB,
said: “Although labour markets have shown
some further signs of improvement,
unemployment remains high in the euro area
and, overall, unutilised capacity continues to
be sizeable.”
Unemployment Rate
The unemployment rate remained the same
between April and May, standing at 11.8%.
This represents 391,800 people out of work. In
the same month in 2013, the unemployment
rate stood at 13.6%.
House Prices
The national average house price in Ireland
stood at €187,736 in Q1 2014, a 0.7% decline
on the previous quarter, according to
MyHome.ie’s analysis of asking prices.
However, it still represents an almost 5%
decline on an annual basis.
Commenting, Angela
Keegan,
managing director of MyHome, said:
“The volatility in asking prices in Q1 reflects a
property market in transition, although a study
of transaction data does show the markets
have bottomed out both nationally and in
Dublin.”
In comparison, the average price of a residential
property in Dublin rose over the quarter by 1.3%
to reach €244,480.
This represents the largest quarterly increase in
asking prices since the property market
bottomed out 12 months ago, with asking price
growth of 3.7% on an annual basis.
Arrears
Principal Dwelling Houses (PDH)
The number of PDH mortgage accounts in
arrears declined by 3.2% between Q4 2013 and
Q1 2014. Out of the total mortgage accounts,
17.3% were in arrears, representing a total
132,217.
There was a fall of 3,361 of the number of
accounts in arrears of more than 90 days, the
Central Bank of Ireland said.
However, accounts in arrears of more than 720
days increased to 35,314, representing almost
68% of outstanding arrears on PDHs and
balances of €7.4 billion.
Buy-to-let (BTL)
The number of BTL mortgage accounts in
arrears increased during Q1 2014 to 39,361,
representing 27.2% of accounts. However,
there was also an increase in the number of
those in arrears of more than 720 days,
representing 9.2% of accounts with balances of
€4.2 billion.
Home Repossessions
At the end of Q1 2014, there were 1,116 PDHs
and 568 BTLs in lenders’ possession. Of the
PDHs, 281 were taken into possession during
the quarter, 54 of which were the result of a
court order, while 227 were abandoned or
voluntarily surrendered.
Top News Stories
Permanent TSB has
appointed Morgan Stanley
to sell approximately €2.6
billion of assets.
The Irish lender is looking to sell its
commercial real estate and subprime
residential mortgage loan books.
PTSB’s subprime unit is Springboard
Mortgages, which stopped writing business in
2009.
PTSB chief executive officer Jeremy Masding
is attempting to refine operations in order to
prove the bank is viable, after it required a €4
billion state rescue package.
The latest mortgage
restructure figures have
been released.
At the end of April 2014, there were 65,698
permanent mortgage restructures, a 3,633 rise
on the end of Q1 2014.
The Department of Finance figures also
showed that the number of split mortgages
has increased, with 11,157 in place at the end
of April.
Other permanent restructures for accounts in
more than 90 days of arrears include a term
extension (14,829), interest-only (1,135) and
arrears capitalisation (19,329). Temporary
restructures include deferred interest schemes
(110) and interest-only (9,016).
KBC Bank has denied threemonth insolvency deals on
mortgages.
The Irish Mortgage Holders Organisation
(IMHO) said it had reached an agreement with
AIB and KBC Bank to allow insolvent borrowers
to be cleared of their debts within three months
if they surrender their property, the Irish Times
reported.
However, the bank has told the newspaper that
this is not the case. Personal Insolvency
Arrangements can, at present, last for up to six
years.
The newspaper contacted IMHO director David
Hall for further comment. He said there was “no
written agreement”, but that the bank had been
“agreeable to facilitate short insolvency
arrangements” at a recent meeting.
The National Asset
Management Agency
(NAMA) has completed its
largest loan transaction.
The Portfolio Eagle loan sale transaction has
been concluded with Cerberus Capital
Management. The deal relates to loans secured
on assets where the underlying properties are
owned by debtors based in Northern Ireland.
NAMA recently announced profit of €211 million
for 2013, with asset sales completed to date
totalling €14.1bn.
Top News Stories
AIB will repay its €20.8
billion bailout funds, its
chairman said at its annual
general meeting.
David Hodgkinson said the money will be paid
back “over time”, and that its plans are
“realistic”.
The Irish Independent reported Ciaran
Callaghan, a banking analyst at
Merrion, as commenting: “Given the
existing favourable market backdrop coupled
with the demand for Irish assets, we believe
an accelerated disposal strategy would be
most desirable, with the bank likely to be in a
strong position to approach investors post the
[full-year] 2014 results early next year.”
The announcement follows the recent news
that AIB returned to profit in Q1 2014, the first
time since it was bailed out.
It has also been revealed that David Duffy, the
chief executive of AIB, has signed a
permanent contract.
Bank of Ireland’s Wilbur
Ross has resigned as
director and sold his shares
in the bank.
Mr Ross and “certain funds connected with
him” has sold approximately 1.8 billion units of
shares.
Bank of Ireland Group chairman
Archie Kane commented: “Wilbur was
instrumental in the success of the 2011 capital
raising and, throughout his tenure, we have
benefited greatly from his insights.”
Standard and Poor’s (S&P)
has upgraded the Irish
sovereign debt rating to A-.
The rating agency has become the first major
one of its kind to provide an A rating to Irish
sovereign debt.
It upgraded the rating from BBB+ to A- with a
positive outlook.
S&P said: “The upgrade reflects our view of
the brightening prospects for Ireland’s domestic
economy, which we expect to underpin further
improvements in the government’s financial
profile, capital markets access and financial
system asset quality.”
minister for finance Michael
Noonan commented: “I am particularly
Meanwhile,
pleased that this upgrade is being driven by
S&P’s view on the improved prospects for the
domestic economy. This is a view I share and
with thousands of jobs being created each
month, strong exchequer performance and with
positive high-frequency indicators, I am
confident that we are moving in the right
direction.”
14,000 job applications have
been received for SSM, the
ECB has revealed.
Danièle Nouy, chair of the supervisory board of
the ECB, said 14,000 applications have been
received for the 800 supervisors that are
required to manage the SSM. The recruitment
campaign should be completed by the end of
summer.
Ms Nouy added: “This is just a snapshot
and I guess you can imagine the challenges we
are currently facing to get our “start-up” fully
running.”

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