BUSINESS OPINIONIRISH BANKERS have been forced into the confessional at results' time over recent months to disclose any subprime sins and to reassure the high priests of the investment community that their transgressions have been nowhere near as mortal as some of their international peers.

They have been largely successful, showing little or no direct exposure to subprime investments, and have taken great pains to dispel wider concerns about their liquidity and funding.

But they have not been absolved - Irish bank stocks have fallen 43 per cent over the past 12 months and 8 per cent since mid-November when Bank of Ireland became the first Irish bank to report results since the credit crunch began last August.

International investors are still unsure about how Irish banks will fare in a falling property market. Banks will have to show that bad debts will not rise significantly and that they can cope with the increase. Once again, disclosure is crucial if the banks are to avoid harsh penance.

This week, Anglo Irish Bank will enter the confessional again. On Wednesday, when the bank reveals its results for the half-year to March 31st, the bank is likely to go to considerable effort in explaining how rising bad debts will not affect its 15 per cent earnings growth target for 2008.

Anglo's business is rooted in property and, in a declining market, it will need to offer the same level of disclosure on impairment charges as it did on its liquidity and funding last November, when it reported its 2007 full-year results. Back then the detail provided was unprecedented. It spent the guts of an hour explaining how its model was sound, when it usually takes no more than 30 minutes.

This time around the convincing will be even trickier. Anglo believes its full-year bad debt charge will be 0.13-0.14 per cent of loans, up from 0.09 per cent last year and below analysts' consensus of 0.25 per cent. This would suggest the bank is comfortable with its asset quality, though it has stressed it "remains highly vigilant". Davy has pointed out that with each 0.1 per cent rise in its bad debt charge, 8-9 cent will be knocked off Anglo's earnings per share, depending on growth rates.

It will be later this year or even next year before we see the full impact of bad debts, given the time it takes these loans to work through the system as the US downturn has shown. In the meantime, Anglo will have to make plenty of noise about its ability to weather the credit crisis and the property slowdown.

Investors will need some persuading. Its shares rose almost 12 per cent last week but the stock is still down 19 per cent since the start of the year.

Anglo could take a leaf out of AIBs book. The States largest bank devoted seven pages of its 2007 annual report to illustrate the strength of its loans, breaking its exposure down by geography, industry, quality and duration of arrears. The aim was to drive home the message - AIB sees no deterioration in loan quality.

However, while banks are busy briefing investors and analysts, they are not exactly shouting about the extra charges that new and existing mortgage holders have to shoulder.

The credit crunch is squeezing bankers and borrowers alike. The rising cost of bank funding has forced most lenders to re-tune their mortgage products by either raising rates on new and existing home loans or tightening lending rules for new borrowers, or both.

Passing higher funding costs on to customers to stop bank profits being eroded is hardly the kind of news banks want to trumpet and some banks are relying on notices in branches and adverts in the bottom corners of news pages to inform customers of rate changes.

With the ECB leaving rates unchanged at 4 per cent since June 2007, borrowers are unlikely to learn of rate hikes until a letter from their bank arrives, unless a journalist gets hold of the story.

The State's largest mortgage lender, Irish Life Permanent, had no plans to inform the media about the 0.25 per cent hike in its standard variable rate 10 days ago, unless a journalist called. This is surprising given that the variable rate affects just under a fifth of its mortgage holders.

Ulster Bank and its sister bank, First Active, also did not alert journalists to rate increases on the same day and only provided the information when asked about it. Press releases issued on the back of queries were titled "reactive statements". Who wants to be proactive about bad news?

Lessons should be learned from the recent PR disaster at Bank of Ireland concerning the theft of four laptops and the loss of personal data on 10,000 customers. Not only did the bank not learn about the loss of the laptops until four months after the thefts, it then took the bank six weeks to inform the Irish Financial Services Regulatory Authority and the Data Protection Commissioner.

Then, last week, the bank had to announce that the number of customers affected had risen to 31,000 and the number of branches involved had grown from seven to 29.

Can you imagine how the market would react if the bank said it was trebling the money it was setting aside to cover its exposure on subprime-linked assets? It would not be pretty.

Clearly, banks believe investors can inflict greater damage than their customers. Amid the crisis, banks are only willing to make comprehensive disclosures when it serves their interests first.

Coming clean is a dirty business.