With just four days to the application deadline for shares in Telecom Eireann, the Republic's financial institutions are reporting a surge in demand for loans. But while the bigger banks are seizing the opportunity to broaden their customer base, others, wary about the implications for their business, have curtailed lending.
Bank of Ireland, AIB and Ulster Bank are all offering customers similar loan packages, and say demand has been building strongly. They also expect many individuals with money in deposit accounts to convert their cash to shares.
Industry analysts say the banks will try to use the opportunity to gain market share and attract future customers to their financial products.
There are reports from across the banking sector of families applying for the £100,000 maximum allocation for each parent and child, and covering some of this outlay through bank loans. In one case, an industry source said last night, a couple with six children applied for £800,000 worth of shares.
"There has been a huge amount of interest, huge demand," said a spokesman for AIB. "With Norwich Union, for example, only a fraction of the population was entitled to shares, with Telecom Eireann, everyone is."
There are indications, too, that a lot of people are going to fund it from their existing cash, the spokesman added.
He said significant numbers of customers holding cash in fixed-term deposit accounts had made arrangements to release the money in time for the share offer.
Bank of Ireland said there had been strong demand for loans to buy Telecom shares.
"Generally, there is major interest - we are very busy," a spokesman said. "We have not been collating data from all our branches centrally, so we will only get a full picture when the cheques and direct debits hit the accounts in early July."
Insiders at the bank said the level of applications for large loans - sums over £30,000 - had quadrupled in the run up to the weekend, and attributed the surge almost entirely to borrowing for the purchase of shares.
Ulster Bank also reported "very strong interest. . . which the bank is happy to facilitate", but added that, while there were some signs of movement of cash from deposit accounts, there was no dramatic shift in established patterns.
Bank of Ireland, AIB and Ulster Bank are all offering a rate of around 8.8 per cent for loans - lower than the usual overdraft rate - but stress that normal lending criteria such as earnings and credit history apply.
Irish Permanent, which offers loans at 10.9 per cent, said there had been very strong demand. A spokesman added that, because the former building society did not always have access to a stream of financial data about each customer, it was being somewhat cautious about issuing loans over £10,000 for the purchase of Telecom shares.
Another former building society, First Active, said it had received substantial enquiries from customers, but had not offered any special package.
"A lot of our lending is secured, and the maximum personal loan - unless it is for a house extension - is £7,500," a spokeswoman said.
Usually, loans from First Active have no facility for early repayment, which would make them unsuitable for Telecom share borrowing, a spokeswoman added.
EBS, the largest building society in the State, said there had been demand from customers for loans to buy shares, but it had not offered these as it would mean a significant change in its approach to lending.
"It is not our business," a spokesman said. "We provide long-term loans for people to buy their homes, and we give the best value for that. This is a short-term thing."
