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Loans from some banks being called in despite repayments being met?


patslatt

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Joined
Apr 11, 2007
Messages
13,693
Years ago a bank manager abroad offered me a loan for business on condition that it could be called in almost immediately on short notice. He hastened to reassure me that in practice the loan would not be called in on short notice. Banks like those loans because they have to put up less reserves against them than on other loans.I declined the loan as I felt uncomfortable with the risk of trusting a stranger.

Yesterday,I heard second hand that a major bank called in such a loan even though the debtor company was servicing the loan and was not behind on payments. It looks like the bank will exercise its power to liquidate the business and come after the business partners for balances owing. But since only one partner in the business has serious assets,it looks like he will be "jointly and severally" liable for all the debt and lose his life savings. In the Celtic Tiger boom,the small print of loans,a form of borrower Russian roulette, was ignored by many borrowers.

This ruthless bank action suggests orders from the top to increase bank liquidity at all costs by reducing loan assets on the books at every opportunity,regardless of the soundness of loans. This is a bad sign for the Irish economy.
 

Morgellons

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If true, that's a very worrying development.
 

carruthers

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Apr 30, 2008
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4,197
Despicable if true but it wouldn't surprise me. The government need to stop the softly softly cr@p with the banks but sadly I don't think they have the cojones. If they had they wouldn't have let Richie Boucher bytch slap them the way he did last week.
 

lying eyes

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We should know that everytime you are dealing with a bank -be alert. They remind me of a tamed wild animal,who may ,and can ,savage one at any time.
 
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Unless you know the exact circumstances it is difficult to tell. It is an unsecured loan with PGs.

It is possible they were aware of something else which made the possibility of them getting repaid remote.

An example would be that Business A has an unsecured loan and does 90% of its business with Business B, A is doing well meeting its loan requirements but finds that B is taking longer and longer to repay.
B not disclosing its almost bust and overtrading while building up debts it will never repay.
Bank aware of B's situation and that it will be shut down in next couple of weeks so it acts to recall the loan from A earlier so as to ensure it collects some money from the situation. Bank cannot disclose anything to A who feels hard done by and completely unaware that its main customer is bust.

Another may be that Bank is aware that a business is spending way more money that it has and wants to recover something before a business goes bust.
 
Joined
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Messages
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Despicable if true but it wouldn't surprise me. The government need to stop the softly softly cr@p with the banks but sadly I don't think they have the cojones. If they had they wouldn't have let Richie Boucher bytch slap them the way he did last week.
Banks get slammed for calling in money before a business goes bust but then get slammed for not calling it in early when they have an idea the business is going bust.
 

ergo2

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Joined
Oct 4, 2008
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14,251
The old statement about banks, that they are either at your feet or at your throat, is still very true.

They shoved money at people during the property boom. Many senior bankers "earned" huge commissions for such lending.

Now they will not lend for any productive purpose, in spite of being expensively bailed out by the tax payer.

Sure, they will offer loans. but the t and c's are such as to make it commercially unworkable
 
Last edited:

Ribeye

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Jul 12, 2011
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26,306
Years ago a bank manager abroad offered me a loan for business on condition that it could be called in almost immediately on short notice. He hastened to reassure me that in practice the loan would not be called in on short notice. Banks like those loans because they have to put up less reserves against them than on other loans.I declined the loan as I felt uncomfortable with the risk of trusting a stranger.

Yesterday,I heard second hand that a major bank called in such a loan even though the debtor company was servicing the loan and was not behind on payments. It looks like the bank will exercise its power to liquidate the business and come after the business partners for balances owing. But since only one partner in the business has serious assets,it looks like he will be "jointly and severally" liable for all the debt and lose his life savings. In the Celtic Tiger boom,the small print of loans,a form of borrower Russian roulette, was ignored by many borrowers.

This ruthless bank action suggests orders from the top to increase bank liquidity at all costs by reducing loan assets on the books at every opportunity,regardless of the soundness of loans. This is a bad sign for the Irish economy.
This stuff has been happening since the bubble burst, and unfortunately it's completely legal,

It's irrelevant whether payments are up to date or not, if the loan docs say that the loan can be called, than it can be called,

That guy needs to immediately put his and his families interests first and do what ever is required to secure a future,

If he has assets the bank may be willing to strike a deal with him in order to avoid a legal battle,

But he needs to adopt the attitude that they might try to fck him,

So, he should also have a Plan B in case the bank won't deal!
 

patslatt

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Apr 11, 2007
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13,693
Despicable if true but it wouldn't surprise me. The government need to stop the softly softly cr@p with the banks but sadly I don't think they have the cojones. If they had they wouldn't have let Richie Boucher bytch slap them the way he did last week.
But the pressure on liquidity would be greater if the government demands easier lending practices. Maybe the banking system liquidity is being drained by huge mortgage arrears,including arrears on about 20% of home mortgages.
 

patslatt

Well-known member
Joined
Apr 11, 2007
Messages
13,693
Unless you know the exact circumstances it is difficult to tell. It is an unsecured loan with PGs.

It is possible they were aware of something else which made the possibility of them getting repaid remote.

An example would be that Business A has an unsecured loan and does 90% of its business with Business B, A is doing well meeting its loan requirements but finds that B is taking longer and longer to repay.
B not disclosing its almost bust and overtrading while building up debts it will never repay.
Bank aware of B's situation and that it will be shut down in next couple of weeks so it acts to recall the loan from A earlier so as to ensure it collects some money from the situation. Bank cannot disclose anything to A who feels hard done by and completely unaware that its main customer is bust.

Another may be that Bank is aware that a business is spending way more money that it has and wants to recover something before a business goes bust.
The above situation was true in the old days when bank managers and loan officers at the local level made it their business to "know your customer". Chances are today the decision to call in the loan was made by a young B.Com in head office trying to meet spreadsheet loan targets ordered from the top.
 
Joined
Aug 6, 2007
Messages
22,911
The above situation was true in the old days when bank managers and loan officers at the local level made it their business to "know your customer". Chances are today the decision to call in the loan was made by a young B.Com in head office trying to meet spreadsheet loan targets ordered from the top.
Not necessarily but even were that the case then always possible to get that reviewed by someone else.

There are a number of options available,
1.) Offer a full and final settlement figure for the loan...........30% of loan is a good place to start and negotiate from there
2.) Find what loan level would be within their parameters as if its €60k and they need it to be at €40k then agree to get it there within a set period of time.
3.) Request the decision is reviewed at a higher level with the reasons behind it at a senior level, its quite possible that the decision was made on the basis of a lack of information or non information.

I had a bank request something similar in the Uk on a property account but when I supplied what they needed we agreed that the overdraft would get reduced over a 3 year period which was more then generous and I made person concerned reach their target plus they met mine.
 

diaspora-mick

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Joined
Oct 19, 2011
Messages
4,795
This ruthless bank action suggests orders from the top to increase bank liquidity at all costs by reducing loan assets on the books at every opportunity,regardless of the soundness of loans. This is a bad sign for the Irish economy.
When I read the OP for some reason I was reminded of that quote from Lord Acton: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
 
Joined
Aug 6, 2007
Messages
22,911
When I read the OP for some reason I was reminded of that quote from Lord Acton: "The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks."
People want something for nothing and now its about human nature of how much you can get when someone else is paying.

People claim its all about equality but funnily enough those wanting equality are those who offer little and demand most.

It is no shock why tax avoidance is the biggest growth area.
 

Iarmhi Gael

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Joined
May 2, 2007
Messages
3,857
if it helps my business overdraft wad called in by AIB four years ago. wad given a 5 year loan in its place. was annoyed but in hindsight the best thing that could have happened as have it played off not and operate with no bank loans or overdrafts
 

Nemesiscorporation

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Joined
Oct 2, 2011
Messages
14,214
Years ago a bank manager abroad offered me a loan for business on condition that it could be called in almost immediately on short notice. He hastened to reassure me that in practice the loan would not be called in on short notice. Banks like those loans because they have to put up less reserves against them than on other loans.I declined the loan as I felt uncomfortable with the risk of trusting a stranger.

Yesterday,I heard second hand that a major bank called in such a loan even though the debtor company was servicing the loan and was not behind on payments. It looks like the bank will exercise its power to liquidate the business and come after the business partners for balances owing. But since only one partner in the business has serious assets,it looks like he will be "jointly and severally" liable for all the debt and lose his life savings. In the Celtic Tiger boom,the small print of loans,a form of borrower Russian roulette, was ignored by many borrowers.

This ruthless bank action suggests orders from the top to increase bank liquidity at all costs by reducing loan assets on the books at every opportunity,regardless of the soundness of loans. This is a bad sign for the Irish economy.
I know someone quite well who had a loan called in on her in Spain, when she was back in Ireland at a family members wedding, with only 5 days to repay it in person. She had to leave the wedding that night and fly back to Spain in the morning.

In Spain they actually try to find out when you will be away so as to call in the loan and asset strip your business. In my friends case it was only €4,000 outstanding and she was able to clear it with her credit card, much to the annoyance of the bank.

When I was last back in Ireland last month, someone mentioned this had happened in Donegal, but I took it with a pinch of salt, as I though probably some facts are missing in the story I was told, but my cousin told me clearly that someone was given two weeks to repay there car loan for a car, even though they were actually ahead in payment by four months. I thought what I heard back in Ireland hard to believe, but since I have come back to Sweden I have been hearing about people getting loans and even mortgages called in Spain, Italy, Cyrpus and Greece. I would not be suprised if the same is starting in Ireland.

If this does start to happen in Ireland, don't be suprised to see them demanding those who released equity from there homes hand over the deeds or sell to repay the loan immediately as has started to happen in Spain and Greece.
 

Tea Party Patriot

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Joined
Oct 31, 2010
Messages
11,557
Years ago a bank manager abroad offered me a loan for business on condition that it could be called in almost immediately on short notice. He hastened to reassure me that in practice the loan would not be called in on short notice. Banks like those loans because they have to put up less reserves against them than on other loans.I declined the loan as I felt uncomfortable with the risk of trusting a stranger.

Yesterday,I heard second hand that a major bank called in such a loan even though the debtor company was servicing the loan and was not behind on payments. It looks like the bank will exercise its power to liquidate the business and come after the business partners for balances owing. But since only one partner in the business has serious assets,it looks like he will be "jointly and severally" liable for all the debt and lose his life savings. In the Celtic Tiger boom,the small print of loans,a form of borrower Russian roulette, was ignored by many borrowers.

This ruthless bank action suggests orders from the top to increase bank liquidity at all costs by reducing loan assets on the books at every opportunity,regardless of the soundness of loans. This is a bad sign for the Irish economy.
It is very hard to get banks to play ball these days. The loans you are talking about are the worst type, but in other cases where a business has strong pre-debt cash flows they are also very reluctant to do any restructuring that would ensure them getting all their money bank and the business continuing.
 

Lassie

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Apr 1, 2011
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2,150
NEVER EVER TRUST BANKS. One of the best pieces of advice my father gave me.
 

DuineEile

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Aug 29, 2010
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14,939
In countries with lots of guns, there would be a few people going "postal" in banks by now, if their banks acted like the Irish banks.

Never mind their pensions, these ************************s need decades of jail time.

D
 

patslatt

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Joined
Apr 11, 2007
Messages
13,693
Not necessarily but even were that the case then always possible to get that reviewed by someone else.

There are a number of options available,
1.) Offer a full and final settlement figure for the loan...........30% of loan is a good place to start and negotiate from there
2.) Find what loan level would be within their parameters as if its €60k and they need it to be at €40k then agree to get it there within a set period of time.
3.) Request the decision is reviewed at a higher level with the reasons behind it at a senior level, its quite possible that the decision was made on the basis of a lack of information or non information.

I had a bank request something similar in the Uk on a property account but when I supplied what they needed we agreed that the overdraft would get reduced over a 3 year period which was more then generous and I made person concerned reach their target plus they met mine.
These options are not available and the bank is proceeding to seize assets.
 
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