Brendan Burgess
Founder
- Messages
- 52,238
... AIB is looking good for having recently cut its variable rate, somewhat unexpectedly. There are several reasons why we should question this and other aspects of the bank’s business.
AIB is effectively a state-run entity, not only in shareholding, but in direction of pricing (previously it was alone in lowering variable rates at the behest of Enda Kenny in 2011), and now it has reduced rates in a move which was seen positively, but which has real consequences.
As a financial broker in my day job, my own inherent bias is to cheerlead this. Both competition and lower prices are good for the industry and the firm I work at, but critical analysis requires some balance. The flipside is that the 25 basis point rate reduction on the residential variable rate loan book (which is about €16 billion) wiped in the region of €40 million in interest income off AIB’s income statement.
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AIB is successfully gaining market share at existing prices. This move was, and is at its root, a political one, which makes for dire banking and at a time when the bank has not yet repaid the taxpayer any meaningful amount of that €21 billion – contributions to date were mainly taxes and penalties.
..............The banks aren't screwing anyone - it's the practical difficulties associated with repossession. SVR rates are not expensive relative to the risks associated with the lending
..............There was a survey done that 18% of mortgages had serious flaws that meant Banks had difficulty enforcing them.That cost surely id down to Banks incompetence? Should paying clients subsidize that?...
Surely this has to do with the relatively tiny size of the market -- simply not worth the bother given the massive scale of globalised banking, and especially given that a new bailout politically is not going to be on the cards for a very long time to come. And, given what banking has gotten away with in the recent past in this country, if I were a German or British bank I would stay well clear for the time being -- the Irish public, once bitten, is unlikely to be so acquiescent next time.Why aren't we seeing any competition then - surely a few other banks from overseas with none of the legacy issues re trackers / losses looking for a piece of the pie.
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