Friday, April 30, 2010

Fingleton’s fantasy at Irish Nationwide is all dust

Irish Nationwide The Irish Nationwide Building Society presented a gung-ho image of its achievement, ambitions, prospects and the calibre of its chief executive, Michael Fingleton, even if the language used to express this was banal and repetitive.

Massive Expansion in Lending

The increase in mortgage lending between 2003 and 2007 was 189%.  This is why taxpayers are being stalked for €2.7 billion in bailout money.  This is why such a high proportion of the assets of this decrepit building society are being dumped on the doorstep of NAMA.  This is why the Irish Government want the citizens to be subdued, indifferent and ignorant.  Ireland’s GDP grew by 36.6% from €139.4 billion in 2003 to €190.6 billion in 2007

Loan growth Bank of Ireland between 2003 and 2007 was 19%; by AIB was 37% and loan growth at Anglo Irish Bank was 37%.

The loan growth at the three Icelandic basket-case banks between 2003 and 2007 was – Kaupthing 72%, Glitner 54% and Landsbanki 57%.

At the benign end of the scale, the Swiss banks must have appeared to Fingleton to have been in a coma.  Loan growth over this 5-year cycle at UBS was 9% and at Credit Suisse

Chicken’s come home to roost

Results for year ended 31 December 2009 reported a loss of €2.48 billion, a requirement for the Irish taxpayer to provide €2.7 billion in bailout funds, a declarations that assets with a book value of €8.7 billion will be sold to NAMA and that 96% of its loan impairment provisions relate to commercial loans.

The Chairman, Daniel Kitchen stated that the problems reported are a consequence of the nature of the operation of the business which was “clearly a flawed model” and that he was sanguine about Irish Nationwide’s capacity to ‘outperform’ (wow), in the short term.  The new chief executive, Gerard McGinn, attributed the lousy performance to the “impact of the lending policies and practices of previous management”.

It is interesting to see how previous management reported their annual results from the time the credit bubble began to inflate on 1 January 2003.

2009 Results

Interest earned from loans was €529.4 million but €324 million of this has not is ‘unrealised’!  Interest paid on customer savings accounts was down 42.3% to €420.8 million.  If the ‘unrealised’ interest were never to materialise, the net interest income of Irish Nationwide in 2009 would be –€215.4 million.

A total of €4.793 billion in debt is due for repayment before 22 September 2010. How can this be accomplished?

Of the €1.189 billion owing to banks, €1.052.3 billion is repayable on demand and the balance in less than three months.

Impaired loans amount to €2.792 billion but only €105.8 million of this impairment relates to Irish residential lending.

“The final losses on the asset portfolio remain highly uncertain”  until each and ever asset is resolved.



While there were 23 building societies in existence when the State was founded that number shrunk to two after the passage of the Building Societies Act 1989 – EBS and Irish Nationwide. ICS Building Society was acquired by Bank of Ireland where it has operated within the Ireland Retail Division – and is about to be disposed of.

One of Fingleton’s principal goals was to demutualise ‘his’ building society

1994 Annual Report: “In order to enhance all the options open to the Society we

continue to seek a change in Section 102 of the Building Societies Act, 1989. On the

basis of the new structuring within the whole State banking and financial sector through the proposed disposal in whole or in part of the TSB Bank, ACC Bank, and

ICC Bank the restrictions of Section 102 are increasingly superfluous and irrelevant.

It is positively discriminatory against the Society, especially in that the Society must

now compete, without any privileges or advantages, with all other financial institutions to whom such a restriction does not apply. It is in the interests of our shareholders and our staff that this Section be amended to reflect the new realities of the market place.”

1998 Annual Report:  “While mutuality is still a relevant concept even if the number of practitioners are reducing (there really are now only two, Irish Nationwide and the EBS) this as we have repeated often before should not be to the exclusion of other options and the Board of the Society has never presumed on behalf of its members to exclude any such option. Indeed that is why we have consistently sought to have Section 102 of the Building Societies Act, 1989 amended to enable the Society to have the same options that are available to other competing financial institutions. We hold no brief for mutuality as an exclusive option. If we were convinced that changing the corporate status of the Society was the correct option for the members and staff of Irish Nationwide we would have no hesitation in recommending this course of action.”

1999 Annual Report “Your Society gave a commitment to review our present and future status during the year in line with market forces and developments. This review was well advanced when we were forced to pause and to reconsider the position in the light of developments in the financial markets and particularly the serious downturn in the share values of the various financial institutions. Suffice to say that everything is on hold at the moment but we will continue to monitor the situation on an ongoing basis.

We have no brief for mutuality as an exclusive option. If we were convinced that changing

the corporate status of the Society was the correct option for the members and the staff of Irish Nationwide we would have no hesitation in recommending this course of action.”

Personal Remuneration

Michael Fingleton enjoyed personal remuneration from Irish Nationwide of €10 million and a personal pension fund in 2006 just shy of €29 million.

Fingleton’s Personal Remuneration
at Irish Nationwide Building Society






























Directors’ Report 2003:  “The excellent results we now report are the strongest yet in the Society’s long history of growth and achievement and significantly enhance shareholder value.

The Society has a strong and effective management team headed by a strong and focused chief executive (Fingleton) whose experience and expertise has produced exceptional results year after year

The Society has improved its cost income ration to a new record low of 21.43%

The Society’s plans for demutualisation have made further progress during the year (2003) and the Government agreed, at the Society’s request, to bring in appropriate legislation to enable the Society achieve a solution which would reduce the uncertainty of future ownership and greatly enhance shareholder value and give the Society the options required to do so”

Directors’ Report 2004

“The excellent set of results we now present clearly reflects the effectiveness of the Society’s strategy that has been successfully implemented and developed over many years.

The success of the Society is reflected in its strong chief executive, its excellent staff, its highly qualified and experienced Board of Directors.

The Board of the Society is fully committed to demutualisation.  The Minister for the Environment, Heritage & Local Government (Martin Cullen) issued a full statement on behalf of the Government on 16 December 2003 announcing the Government approval of a package of measures to amend the current Building Societies legislation, including the removal of the five-year barrier under Section 102.  The proposed legislation is extensive and contains several provisions to enhance the future development of building societies as independent institutions as well as removing archaic unnecessary procedures.

On 15 September 2004 the Minister, Martin Cullen,  wrote to the Society stating “my Department is at present involved in the drafting process with a view to finalisation of the legislation in the Autumn (of 2004)”.  The Board of the Society,of course, welcomes those announcements and statements but is disappointed that the proposed legislation will not materialise until later in 2005.

The demutualisation process must be managed in a prudent, professional and orderly manner in order to maximise the value for the management, staff and (lastly) members.

The cost income ratio was further reduced during the year from 21.43% to a new record low of 20.24%.”

Directors’ Report 2005

“The record results we now report are the strongest yet in the Society’s long history of outstanding growth and achievement.  The excellent set of results reflects the effectiveness of the strategy that has been successfully developed and implemented over many years.

The long awaited legislation is now being drafted and we understand will be published shortly and finally approved before the Summer recess (of 2006).

In the year under review, the Society further improved its cost income ratio to a new record low of 15.18%.

Under the strong leadership of the Managing Director together with a committed and supportive staff, backed by an informed and unified Board, the underlying value of the Society has increased six-fold in the past ten years”

Directors’ Report 2006

“The record results are by far the strongest since the formation of the Society in 1873.

The results demonstrate once again the exceptional financial strength of Irish Nationwide and clearly reflect its strong management together with the effectiveness of its lending strategy developed and successfully implemented over the years.  The Society has developed a successful business model and continues to be focused on our chosen market.

In a year which may well be the last reporting year as a building society, it is appropriate that the Society should present such an outstanding set of results.

Despite relentless opposition from some of our members’ and other vested interests’, the long awaited legislation formally became law in August 2006.  The Board decided to await the publication of the 2006 audited accounts before formally going to the market.  The value of the Society has been enhanced and the net book worth of the Society is up 27% to over €1.2 billion”.

Directors’ Report 2007

“The Board will continue to seek a purchaser for the Society at an acceptable price and will consider all the options open to it to achieve the objective and to realise the optimum value for its members and staff.

The exemplary results we are privileged to report are by far the strongest yet in the Society’s long history of growth and achievement and significantly increase shareholders value with the Society’s net book worth now in excess of €1.5 billion.

The cost income ratio is now at a record low of 10% having fallen from 14.44% in 2006

Directors Report 2008

“ … was a disappointing year for the Society due to the disruption in global financial systems, the onset of the recession in Ireland and the UK and the resultant downturn in property values. 

Cost control has always been and continues to be a major objective of the Society’s policy.  The 2008 cost income ratio is 17% due to reduced income in 2008 rather than cost increases.

The Board wishes to thank Mr Fingleton for the enormous and unique contribution he has made to the Society over the past 37 years and wishes both Michael and his wife, Eileen, many happy years of retirement”

Directors’ Report 2009

“It is with great disappointment that I have to present to you the accounts for the year ended 31 December 2009 which reflect unprecedented levels of impairment on our loan book which gave rise to losses on a massive scale in the context of the Society.  The collapse of property markets in Ireland and abroad gave rise to the impairments but this was exacerbated by the nature of the operation of the business which was clearly a flawed model.  Final losses on the asset portfolio remain highly uncertain.  The financial results reflect the impact of the lending policies and practices of the previous management.  The scale of losses reflect the failure of the Society’s commercial lending strategy which was over reliant on asset values.  96% of the loan impairment provisions relate to commercial loans.

The Group’s customer accounts decreased by €1.5 billion in 2009 as a result of deposit outflows from the Group’s Isle of Man subsidiary and reflects concerns held by UK investors about deposit security despite the Irish sovereign guarantee.  2010 remains highly uncertain in the context of an industry seeking to define its future structure.”

Mortgage Lending and Mortgage Funding


  Total Mortgages
Commercial Mortgages
% Total
Customer Accounts
(€ Savings)
2003 4,248,000   3,465,000
2004 5,553,000 35% 4,755,500
2005 7,572,000 32% 5,733,500
2006 10,306,000 76% 6,602,700
2007 12,281,000 80% 7,250,100
2008 10,473,900 78% 6,785,000

Wednesday, April 21, 2010

Response of dithering Taoiseach to Boucher pension deal is devastating

Leinster House I watched with quivering embarrassment, revulsion and genuine horror, as Brian Cowen, our Taoiseach, waffled on Monday in Tullamore and again yesterday in the Dáil Éireann about the €1.4 million spent by the Court jesters of Bank of Ireland bloating the pension entitlement of their chief executive, the esteemed insider, Mr Boucher.  Cowen states that he has no legal power to intervene in this sacred contract between rational parties, but suggests that it would be ‘helpful in public perception terms’ if Boucher refused to accept the bloated pension.  Cowen urges public sector workers, who are to vote on a pay freeze of indeterminate duration, that they ‘should see the big picture’.  I have no doubt they will and see it very clearly.  They will see it in kaleidoscopic clarity.

That, my dear readers, is precisely how the Irish financial system was regulated by flaccid, stuttering, incompetent, bow-legged, politically compromised morons and gobshites, before the economy collapsed from exhaustion in early 2007 with a half million people lost their jobs and everybody’s equity holdings fleeced to near extinction. 

The verbal and leadership skills of our regulators and leaders did not move beyond nuanced euphemisms and when combined into paragraphs these looked and sounded as robust as a pre-fabricated hen house in a raging storm.

When a chief executive presides over a company that loses €1.8 billion, equivalent to no less than 98% of its market capitalisation and that loss is substantially attributable to his own decisions, what usually follows is the presentation of a crisp P-45.  Very few are presented with a gilded pension allowing them to retire with defined benefits of a magnitude that is beyond the range of most people.

Cowen will down in history as the most dangerous Minister for Finance the country ever had; the Minister who supervised an expansionary credit bubble that has beggared the nation the consequences of which he never understood.  As Taoiseach, he presents as a delusionary, curmudgeon who blames everyone but his own ineptitude for what has transpired. and never a word of apology.

His body language and demeanour when referring to Boucher has been as taciturn as might be anticipated had an elderly, blind, poodle piddled beside him on the floor of a convent parlour.

Contract, or no contract, this is a matter of fundamental public interest, morality and moral authority - the Taoiseach's moral authority.

The value of the Bank of Ireland Staff Pension funds are reporting a deficit of over €1.6 billion, a deficit that has increased by over 200% since 2008.  The funds' assets are now less than 70% of the present value of future obligations.

If this adverse trend were to continue, even at a more moderate rate of deterioration, there is a real and grave threat that there will not be enough resources to pay Bank of Ireland pensions' in full.
How would Fianna Fail and Green Party candidates feel about canvassing Bank pensioners' in forthcoming elections if they are only receiving forty or fifty percent of the pension payment they are entitled to and personally paid for, against a background of the Taoiseach's apparent indifference to the Boucher gilded pension deal that has been funded from gigantic Bank of Ireland losses and bailout money?

Monday, April 19, 2010

Bank of Ireland’s response to CIROC Report

Bank of Ireland The publication of the Annual Report of Bank of Ireland for the nine months ending 31 December 2009 provides the first opportunity to see how the Bank is complying with the recommendations of the Covered Institutions Remuneration Oversight Committee (CIROC).

Their recommendations were contained in the report made to the Minister for Finance on 27 February 2009, two days after the appointment of insider, Richie Boucher, as chief executive of Bank of Ireland was announced. 



Recommended by CIROC – adjusted for 9 month period


R Boucher Chief Executive



including a pension fund top-up of €1,490,000

P Molloy



for six months from 3 July 2009

Chair of Major Committee











Deputy Governor and senior independent director
Group Audit Committee

Group Remuneration Committee

Court Risk Committee

Pension Fund Trustees

Ordinary board member  


1 @ €26k for 3 months
1 @ €37k for 6 months
2 @ €59,000
1 @ €65,000


Boucher’s Pension

Directors’ of the Bank of Ireland are members of the Bank Staff Pension Fund, a defined benefit plan, which is a contributory scheme at the rate of 2½% of salary. Benefits are based on an accrual rate of 1/60 of pensionable salary for each year of a Director’s pensionable service with a maximum of 40/60th payable on normal retirement, at age 60.

Boucher became joined Bank of Ireland in December 2003. He was appointed an executive director on 6 October 2006; chief executive on 25 February 2009.

His normal retirement should be in 2017 at which time he would have accumulated 13 years of pensionable service providing him with a pension of 13/60th of his final salary - €261,625 based on prevailing rates. But the impact of this deal is that can take a hop, skip and jump at the age of 55 with close to €400,000 in his pocket.  That is over twice the salary of the Minister for Finance and significantly more than all top-level office holders whose positions are of systemic importance.

Pension Fund Deficit

The Bank Staff Pension Fund is running a deficit of €1,631,000,000 and its assets are only capable of meeting under 70% of the present value of its obligations amounting to €5.3 billion. How is it possible for a pension fund with a deficit of this order to take on additional burden?  What tone does this decision indicate to staff and stakeholders’ generally?

This pension fund was closed to new members from 1 October 2006, five days before Boucher became an executive director and the only exception was in respect of entry-level employees who joined Bank of Ireland between that date and 21 November 2007. All others are obliged to become members of the Bank of Ireland Group Pension Fund of the group’s UK pension fund – both of which are hybrid schemes which include elements of a defined benefit and a defined contribution scheme.

The CIROC Report is scathing in its criticism of bank top-management who make little, or no, contribution for their pensions and advocated that pension arrangements for senior executives should be at least broadly similar to those applicable to the generality of the staff. How many staff in Bank of Ireland can retire at the age of 55 with 11 years’ service and a pension based on 59% of their salary?

Share Ownership Policy

The Annual Reports of Bank of Ireland for 2005, 2006 , 2007 and 2008 states that ‘executive directors are expected, over time, to build a Group stock ownership equivalent to a minimum of 100% of salary’.

Boucher owns 33,127 ordinary shares in Bank of Ireland. If he were as attentive to this policy as he expects the Bank to be to his pension he would own a minimum of 543,307 ordinary shares.

Perhaps Boucher and Molloy could approach the Boucher pension issue with the same level of indifference that he displays towards the share ownership policy.

Thursday, April 8, 2010

New departure in reputation-risk management by the Vatican

Vatican flag Toyota, is the largest motor corporation in the world in terms of sales volume and it sustained this position through achieving the highest possible standards in various engineering functions and processes.

Toyota recently had a spot of bother when some Toyota vehicles suffered major quality problems involving defective brake pedals.  The US Department of Transportation wanted to fine the company over $16 million following a spate of injuries and a number of deaths.

The president of Toyota, Akio Toyoda, has prostrated himself in front of Toyota’s worldwide customers to redeem their goodwill and he also established a special committee of global quality experts to respond to its global crisis and product recall.

Compare this approach to that of The Vatican.   Cardinal Angelo Sodano, Dean of the College of Cardinals, gave an interview recently to L’Obsservatore Romano who described the criticism of the Holy See relating to clerical child sex abuse as ‘truly incomprehensible’ , a comment that I would describe as absurd, unworthy and mischievous,

Sodano claims that those who criticise the Pope and bishops' are transforming ‘individual guilt’ into ‘collective guilt’; that this is manipulative and part of a cultural battle that challenges the moral truths propagated by the Pontiff.  How would Toyota customers’ have responded to charges that they engaged in a cultural battle with the car company that challenged the quality of its engineering?

Those who criticise The Vatican are doing no such thing. They are seeking a degree of accountability and candour that has been concealed by decades of obfuscation and evasion to the point where too many bishops’ have lost the vital resource of their office – moral authority.

They are also seeking recognition that the civic processes in society are supported unambiguously by the Church and not impeded by anything. including canon law and diplomatic bolt-holes. They demand that the Holy See promptly replace bishops who have lost moral authority and stature because they have concealed wrongdoers’ from justice, or were implicated in doing so.  There is no justification whatsoever for the creation of a flimsy cordon sanitaire to insulate them and the Pope from accountability and consequences.

Wednesday, April 7, 2010

Do the Irish apportion blame on everyone but themselves?

The Irish Times Clock Sarah Carey, in an interesting article in The Irish Times today, opines that the nation’s problems arising from weak economic policy and poor regulation can be directly attributed to how the electorate voted and that the electorate must therefore shoulder the blame for the consequences.

The practice of voting for whoever will benefit their pocket has got Ireland to where we now are and that, while policies change, fundamental character does not.

This is undoubtedly conservative, traditional, politically in-bred society although their is a hint of change in the air.  But if elections are held every five years and a crisis emerges mid-term, are voters not entitled to expect some semblance of vicarious responsibility, competence and accountability on the part of the political system, if not from each of the individuals voted into office?  The political system comprises the elected combined with the appointed officials who call the shots and run the country. 

These are the people who allow houses to be built on flood plains.  These are the politicians who choose tribunals’, with the lifespan of an elephant, as the means of investigating malfeasance with no judicial consequences but providing lawyers with enormous rewards in the form of professional fees.  These are also the politicians who launched three compelling and searching investigations into clerical child sex abuse and knocked the incumbents of self-righteousness off their velvet perches.  These are the politicians who successfully introduced a culture change in the form of the smoking ban and they are the politicians who presided over the FÁS debacle and its gilded peasant aristocracy.

Individual voters’ cannot have and cannot be expected to have the expertise or judgment to determine which policies are sustainable and which are not.  That is the function of leadership. It is also the function of leadership to educate the public on the merits of their advocacy.   Voters are also entitled to the protection of an accountable leadership.

The custom of voting for the party who will benefit the pocket will not change but the perception of what actually benefits the pocket will. 

The next time voters go to the polls they will vividly remember and punish severely all politicians implicated in the misery afflicting this country. They will recall the truths, half-truths, damned lies and opaque nuances, ignorance of basic economics, ineptitude and complicity that is politicians' common currency. The collapse of some politicians at the polls will be as dramatic as that of Lehman Brothers and Bear Stearns, two of the names cited in defence of the utterly indefensible.  

Voters will reflect carefully on the deleterious consequences of awful governance and sheer delinquency. They will note how many of those who directly wreaked havoc continue to be cosseted by the patronage of the government with positions of influence, prominence and power. They will see past the caricatures of FitzPatrick and Fingleton, Ahern and Cowen and vote with passion and purpose. Policies will change and so will the capacity to ensure their effective execution.

I am often amazed by the wisdom of electorates acting collectively; by the frequently fine balanced judgements they make.  Whatever criticisms one might make, the notion of being stupid or politically blind is not one that can stick.  Thank God for the floating voter!

Tuesday, April 6, 2010

Parliamentary politics is a family affair in Northern Ireland

The next British general election is to take place on May 6th.  For many of the 18 MP’s in Northern Ireland, politics is a family affair with a significant number of relatives occupying paid positions that carry an array of titles and presumptions of rank.

Frances Campbell, Diane Dodds (until 28 April 2009), and Eleanor Donaldson have been employed office manager, secretary, part-time secretary, senior secretary, parliamentary assistant or senior research assistant reporting to Gregory, Nigel and Jeffrey.  Diane Dodds was elected an MEP in 2009.

Stephen McCrea has been employed by his father, William, as a secretary / case worker.  Paula Gallagher toiled as a research / parliamentary assistant to her father Eddie McGrady. 

The Paisley family have been heavily embedded in Westminster.  Ian’s daughter Cherith Caldwell acted as office manager while her sister Rhonda Paisley was diary secretary and parliamentary assistant.  Their brother Ian Junior was a part-time parliamentary assistant and is now a DUP candidate in the forthcoming election seeking the seat his father held in North Antrim.

Each member of the Robinson family worked in Westminster until Iris took her leave.  Their daughter, Rebekah, worked as office manager and part-time secretary for mum and dad.  Her brother, Gareth acted as parliamentary assistant to both and he also represents the voters of Castlereagh East on the Borough Council.

Friday, April 2, 2010

Scope for Anglo Irish Bank to become a ‘business bank’ very slim

Anglo Irish Bank An objective cited for bailing out Anglo Irish Bank and committing €22 billion to date is that Anglo would become a business bank in due course.  But, of course, AIB and Bank of Ireland will also need to become business banks, even if operating on a diminished scale.  What scope is there for all three to be ‘business banks’?

Anglo reported a loss of €12.7 billion on a loan book of €72.1 billion – all property related, including hotels and restaurants.  How realistic is the proposition that a bank where the average remuneration by employee is over €88,000 per annum but where the loss per employee exceeds €7.5 million become a business bank?  The patron of Anglo Irish Bank since nationalisation, the Department of Finance, employs 634 civil servants whose average pay in 2010 will be €55,678

The scale of borrowing by Irish residents  in areas outside construction, property development, hotels / restaurant  and residential mortgage lending is:


€ Million

June 2009 Sep 2009
Agriculture and Forestry 5,341 5,210
Fishing 381 374
Manufacturing 7,821 7,559
Electricity, gas and water supply 1,015 1,100
Wholesale trade and repairs 13,236 12,965
Transport, storage and communications 3,283 3,225
Financial institutions 86,181 86,206
Education – schools and colleges 823 856
Health and social work 2,638 2,660
Community, charity, social 2,926 2,843
Personal finance for investment 2,659 2,726
Other personal finance 19,210 17,638
  €145,514 €143,362
Mortgages, property development, construction, hotels and restaurants

Total borrowing by Irish residents €386,390 €377,248
  (62%) (62%)
Anglo Irish Bank 15 Months to 31 Dec 2009 Year to 30 Sep 2008
Staff costs €186 million €206 million

Average number employees

1,681 1,864
Average cost per employee €110,648 €110,515
(Loss) / Profit for period (€12,702 million) €664 million
(Loss) / Profit per employee €7,560,381 €356,223

Thursday, April 1, 2010

Requirement to boost capital of Irish banks is a huge challenge.

NAMA_LOGO5 The nation recoils, stunned, by the scale of the NAMA enterprise.   It is interesting to reflect on the scale of additional capital needed by the five banks and building societies that are NAMA clients.  Collectively, NAMA clients’ require additional capital of  €21.8 billion by Christmas, with Anglo Irish Bank accounting for €8.3 billion of this.  This is to be provided by the State as will €3.2 billion needed by the two building societies.  But AIB and Bank of Ireland have to find €10.1 billion by Christmas.

The market capitalisation of all the companies quoted on The Irish Stock Exchange is just shy of €130 billion today.  This figure includes relatively large market capitalisation in CRH €13.2 billion, Diageo €31.2 billion, Tesco €31.1 billion and Tullow Oil €12.4 billion.

The market capitalisation of AIB is €1.05 billion and this bank requires an additional €7.4 billion.  Bank of Ireland has a market capitalisation of €1.6 billion and requires additional capital of €2.7 billion.  Irish Life & Permanent Holdings Plc, which is not a NAMA client, has a market capitalisation of €808 million.  This is the bank which coughed up €7.5 billion that distorted the balance sheet of Anglo Irish Bank on 30 September 2008.

The cumulative loan book of the five NAMA clients and Permanent TSB is over €400 billion and this includes loans made in Ireland and elsewhere.  Approximately €100 billion of the €147.2 billion of residential mortgages in Ireland is attributable to these six institutions.  This is a phenomenal scale of indebtedness and must be seen in the context of housing trends in Ireland over the past decade.

A recent UCD study of residential vacancy levels showed that there were over 345,000 vacant housing units in the country.  Allowing for 64,520 holiday homes which are vacant from time to time and a standard 5% vacancy rate which is the norm and that approximately 10,000 houses are obsolete, there are still over 170,000 vacant houses in the country that fall into the ‘exceptional’ character.

Outstanding private sector credit in Ireland, according to the latest data from the Central Bank is €365.5 billion.  It had exceeded €400 billion in October and November 2008.  While the overall level of private sector credit has been somewhat reduced, the amount of mortgage credit outstanding has remained stubbornly high – close to €148 billion since September 2008 when the Irish banking crisis exploded.

Real estate indebtedness if north of €95 billion while the construction sector owes a further €19 billion.  Agriculture and forestry owe €5.3 billion.  The manufacturing sector owes €7.8 billion. The hotel and restaurant sector, which apparently has 15,000 room in excess of accommodation demand owes €11.2 billion.

Where is the additional capital to come from when all of these circumstances are taken into account.  How many decades will it take for the Irish economy to experience a positive charge?  Comments about the collapse of Lehman Brothers and Bear Sterns are comparable to describing a hurricane in the Caribbean.  The damage inflicted on the Irish economy is due to delinquency closer to home and those who inflicted this might have the courage to own up to it.