Four of the country’s biggest banks united today to stress that business remained open as usual despite the economic slowdown.
As fears heightened that Ireland was on the wave of a recession, the financial services maintained that they would survive the national and international downturn and had the best interest of the country at heart.
AIB, Bank of Ireland, Permanent TSB and Anglo Irish Banks also stressed they were responsible money lenders, that mortgage arrears were low, and blamed an international credit crunch on rising interest rates.
Pat Farrell, of the Irish Banking Federation, said banks were in the business of building long term relationships with borrowers and savers and had an obligation to customers and employees.
He told the Oireachtas Committee on Finance and Public Service that 87 per cent of personal debt was secured on home ownership — with mortgages accounting for €145 billion of the country’s total value of property which stands at €500 billion.
Mr Farrell said just 50 homes were repossessed in 2007 - some of those made voluntarily after a family break-up - and added that only 4 per cent of homes have been bought on 100 per cent mortgages.
“It is not a substantial amount of money,” he said. “It was a brief
development in the Irish market for a short period of time.” Fine Gael’s Richard Bruton accused the bankers of putting in their horns in when people were losing jobs and in financial difficulties.
“It is in the public interest not to have a credit crunch when things are going wrong,” he said.
AIB MD Donal Forde denied his firm had changed or tightened its mortgage or lending criteria.
He - and his banking colleagues - said customers were borrowing less and turning down mortgage approvals as personal assets fell and cash flows tightened.
“AIB has been open for business and remains open for business,” he said.
“We are operating in very difficult financial markets and we have to maintain the confidence of a variety of different stakeholders. “However I am confident that we are getting the balance right and I can reassure the committee that we are determined to manage our business in the best interests of our customers and in the best interests of the continuing development of the Irish economy.”
Anglo Irish Bank’s Willie McAteer said €60 billion had been lent to businesses in the country in the last five years.
He said the sentiment that Ireland was in difficulty was a concern to them. The banks also reassured politicians that strict and thorough policies from the Financial Regulator ensured the stability of banking in the country and would prevent a Northern Rock scenario from happening.
Richie Boucher, of Bank of Ireland, also disputed claims the drop in property equity was having a direct effect on customers.
Mr Boucher said most customers buy properties they can afford, where they want to live, and where they intend to stay for a number of years.
“Negative equity does not impact on the ability to pay (mortgage payments),” he said.
Meanwhile David Guinane of Permanent TSB — which offered the 100 per cent mortgage — said arrears were at an all time low. “Repossessions have not changed over the last three 12 month periods,” he added.