KBC Boss rules out writing off debt.

"The chief executive of KBC Bank John Reynolds has said that the bank is not writing off debt for their most hard-pressed customers"

The quote above as it appears in today's Irish Examiner is just one of a number of similar comments that have come from other bank bosses and bank board members in recent times.

There appears to be an on-going disconnect in the conflicting messages coming from banks, government and Central bank.

What they say and what they do might be separate. I've been told that some banks are doing deals but will not publicise it or acknowledge it in writing etc.

Maybe KBC are sending out a message to avoid the people who can pay but don't don't want to pay crowd.

This kind of hard nosed policy is likely to get the banks into even deeper trouble.

If the banks are determined to keep insolvent debtors on the hook for their debts for the rest of their lives, then the only remaining "fix" open to debtors is to declare bankruptcy. This kind of policy is russian roulette at its most dangerous.

Do the banks really want the bankruptcy floodgates to open.........

The chief executive of KBC Bank John Reynolds

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While he was speaking on behalf of KBC, he is also the Chairman of the Irish Banking Federation.

I do actually believe this message to be true. The banks have no intention of writing off debt, as widely expected and reported elsewhere.

It really doesn't sound too good for the Personal Insolvency Act unless the Government makes an early intervention to ensure that solutions under the act will materialise, as written, and amend the act to ensure that the banks will cooperate. The rules surrounding the veto will need to be revisited sooner rather than later

The Personal Insolvency Act "solutions" are all firmly grounded on debt write-off. If the banks do not cooperate with it, the Personal Insolvency act is dead in the water..

I have made this point before but I think its important. Its early days but the banks do not appear to have any intention to cooperate with the working of the new act

Dr.Debt said:

It really doesn't sound too good for the Personal Insolvency Act unless the Government makes an early intervention to ensure that solutions under the act will materialise, as written, and amend the act to ensure that the banks will cooperate. The rules surrounding the veto will need to be revisited sooner rather than later

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The bottom line is that someone has to pay the piper! Such write downs would impact the T1 ratios for the banks involved and put then in breach of BIS and ECB rules and that is a big "No, No", so unless the government commit to covering the write offs, the banks are not going to be able to do much apart from closing their doors.

Jim2007 said:

The bottom line is that someone has to pay the piper! Such write downs would impact the T1 ratios for the banks involved and put then in breach of BIS and ECB rules and that is a big "No, No", so unless the government commit to covering the write offs, the banks are not going to be able to do much apart from closing their doors.

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We keep hearing that the banks are stress tested and fully capitalised so with comments like this from KBC I doubt it.

This is the kernal of the issue: the bank veto. The banks want to manage debtor affairs over an extended time period, and avoid PIP's or schemes of arrangement, to protect their T1 Ratios.
The only counter option or solution is for debtors to petition their own bankruptcy wherein the new judges will examine the PIA/DSA proposals. Maybe when bank officials have to explain their veto, maybe....? If the banks will not do a write off, then bankruptcy is the solution.

re Ronron, Yes people will need to embrace Bankruptcy were it is the sensible option eg you owe K400 and can only repay on K150 , either the Bank or you make a pragmatic decision.I am sure there will be writeoffs/writedowns etc . A bit like the Promissory note !!!

I thought the banks got €7 Billion between them to use against unsustainable mortgages - or am I mistaken?

@horse AIB / BoI / PTSB but Zero for UB KBC and Dankse

Personally, I think the banks are kicking the 'can down the road' just like politicians are doing with converting the promissory note into long term debt. They are doing the same with me - allowing me to pay interest only on my BTL's and not chasing the capital - knowing that i am not in a position to pay same. They really don't want me to enter a PIA or bankruptcy and seem to be scared sh*tless when i mention the 'B' word! Am awaiting some documentation saying sign for another 3 - 5 years of interest only payments on my BTL's 'and we'll leave you alone'.

In fairness to John Reynolds of KBC Bank he has consistently ruled out writing off debt since at least 2010. I reckon the KBC Bank's PR advisors have tutored him to repeat this simple mantra at every opportunity.