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Oz banker: Irish need out of debt jail

Thursday, October 25 11:47:21

A way needs to be found now to free thousands of Irish home owners from a 'debt-prison' as well as helping the Irish banks manage their way out of the current mess.

That's according to Patrick Tuttle, CEO of Pepper Group, which recently acquired the Irish mortgage business of GE Capital, speaking today at the Society of Chartered Surveyors Ireland (SCSI) Annual Conference.

The Australian mortgage expert said Irish banks need to take some losses to move the economy on - but this also needs to be delicately balanced with their ongoing capital requirements.

Mr Tuttle maintained that whilst there was a perception the Irish banks had been slow to offer such solutions this was largely due to significant uncertainty around the Irish Court process, as well as mixed messages and lack of transparency from policy makers and regulators around what the acceptable forbearance strategies might comprise.

"A balance needs to be struck between debt forgiveness, bank capital requirements, moral hazard, and the genuine need to release borrowers from the 'debt prison' that their family home has become," said Mr Tuttle.

Referring to the fact that 10.2 per cent of Irish residential mortgages are over 90 days in arrears, Mr. Tuttle said that long-term forbearance strategies need to be implemented now to move the market forward and rebuild confidence in the economy and housing market.

"Banks need to take some losses to move the economy but this also needs to be delicately balanced with their ongoing capital requirements," he said.

Meanwhile, Minister of State at the Department of Public Expenditure and Reform and the OPW Brian Hayes, who also addressed the conference, outlined plans for cost savings throughout the public sector property portfolio and said he would bring a new public sector property management plan to Government.

"After pay and pensions, the cost of office accommodation is the Government's biggest administrative overhead. In 2009, we spent E131m leasing property - this year the figure is E112m. I want the state's annual bill below E100m by 2015..the OPW's energy conservation programme which covers 270 larger buildings has to date achieved savings of 17pc (E13.3m cumulative savings)," he said.

He also highlighted the need to locate public service in lower cost locations such as the outskirts of Dublin.

"The obsession with elements of the public sector for being based in the certain parts of Dublin has to end," he said.

Roland O'Connell, President of the Society of Chartered Surveyors Ireland (SCSI), who also addressed the conference, said that there was currently a shortage of prime office space looming in the Dublin office sector and that this was limiting options for Multinationals.

He noted the recent IDA announcement of a shortage of prime office space in the order of 70,000 to 120,000 square ft, which is typically what multi-national companies require.

"International companies have taken 1.5 million square feet of space in the Dublin region over the past three years and the demand for prime office space is increasing. However, no new office buildings have been completed in Dublin in 2012 to meet the demand from international investors and we must facilitate the completion of suitable properties to attract further inward investment," he said.