Banker strikes bum note as regulator warns of return to bad days

Business Week: also in the news were property prices; insurance; and two windfalls

Won’t someone please think of the bankers? All these onerous rules and regulations – not to mention the relentless focus on good governance and constant oversight – it really is a lot to take.

Spare a thought for KBC Bank  having to put up with all this droning on and on about the tracker mortgage scandal and the thousands of people whose lives it turned upside down.*

"What is still an annoying thing is all the tracker mortgage stuff and, honestly, we would recommend to Central Bank of Ireland: come on, guys, turn the page," KBC Group chief executive Johan Thijs told analysts on a call this week. "We're focused on doing business, we've learned our lessons, we know what to do."

That’s despite the bank being the last to own up to the extent of its involvement in the scandal, and only this week finally setting aside €14 million to cover the inevitable fine coming down the road.


Then there's the timing of the remarks. Days earlier, Central Bank deputy governor Ed Sibley warned that bankers are beginning to display echoes of pre-crisis hubris, pressuring regulators to ease back on checks and controls introduced after the crash.

“We’re getting towards that point in the cycle – not just in Ireland, but we’re seeing it elsewhere – where there’s that little bit more pressure,” he said, pointing to bank chiefs lobbying for an easing of mortgage rules as an example.

On that note, Sharon Donnery, Sibley's fellow deputy governor at the Central Bank, warned that easing the restrictions around credit was not the answer to the housing crisis and risked "the re-emergence of a credit price spiral".

Ongoing shortages in supply combined with a moderation in house price growth has prompted calls for a relaxation of the mortgage lending rules, but Donnery said such a move could trigger a rapid spike in prices, followed by an equally rapid decline.

Meanwhile, stockbroker Davy predicted this week that new mortgage lending will overtake repayments on home loans next year in the Republic for the first time since the outset of the financial crisis, returning the market to growth.

Separately, the Central Bank said it is to consider banning dual pricing on motor and home insurance policies as part of its review into the sector. Dual pricing is the practice of offering new customers better rates than those renewing their policies.

ESRI says house prices ‘in sync’

It sometimes seem we never tire of making comparisons with the Celtic Tiger credit-fuelled boom times, and particularly – for obvious reasons – when it comes to house prices.

However, a report by the Economic and Social Research Institute this week concluded Irish houses are not overvalued despite prices rising by 85 per cent since 2013.

It looked at markets in each county and concluded they are not experiencing unsustainable levels of price growth and that the market as a whole is not “out of sync with fundamentals” such as employment, wage growth and household spending.

Indeed, property prices are now rising by just 1.1 per cent, the lowest level in more than six years, as the pick-up in housing supply continues to cool the market.

The latest official figures from the Central Statistics Office show prices in Dublin, which has seen the largest increase in residential construction, actually fell by 1.3 per cent in the 12 months to September.

The figures came as CSO data pointed to a significant upturn in housing completions in the third quarter, including an 81 per cent jump in apartment completions, most of which were located in Dublin.

Separately, the Building Control Management System said there were 7,596 commencement notices or housing starts – a strong indicator of future supply – in the third quarter of 2019, which was up 33 per cent year on year.

On the commercial property front, pub group JD Wetherspoon added to its Irish portfolio with the acquisition of HQ Bar and Restaurant at the Grand Canal, Dublin, for an undisclosed sum. The property on Hanover Quay had a guide price of €5.5 million.

Wetherspoon has yet to decide whether to open a pub immediately or to redevelop the property, which extends to 854sq m (9,192sq ft) split over two levels.

Big pay days in Meath and Spar

It’s pretty much the dream of every start-up, and it’s been realised for one Co Meath couple who are in line for a payout of up to €266 million from the sale of their payment solutions provider to an Australian company.

It all began at a kitchen table a decade ago for Noel and Valerie Moran when their company Prepaid Financial Services was just the kernel of an idea. Now, it has been acquired for up to €327 million, netting them a massive payday.

They weren’t the only ones counting the money this week. The three most senior executives in BWG Foods, owner of the Spar franchise in Ireland, are to share a payout of about €41.5 million in coming weeks.

Chief executive Leo Crawford, finance director John O’Donnell and property director John Clohisey are to receive the payment in December or January, as part of an estimated €81 million deal to sell down their 20 per cent remaining stake in the group.

Shareholders over at Tullow Oil can only look on enviously as more than a quarter was wiped off its stock market valuation after it warned about the commercial viability of two major oil discoveries in Guyana and reported poor production in Ghana.

Staying with corporate news, the jobs market is to get a boost from pizza chain Dominos, which is set to add almost 500 jobs across Ireland as it pursues its plans for expansion.

The company, which has almost 2,000 employees and contract workers at its 85 Irish stores, is looking to recruit for management positions, team members and contract drivers.

*This article was amended on November 16th 2019