I think it’s important to state in opening this piece that Northern Ireland has also been hugely impacted by the sale of non-performing loans, by banks to private equity firms. Over the last few months, there has been some excellent reporting and journalism in the Republic of Ireland, detailing and reporting on the fact that the sale of these loans to very wealthy private equity funds is now causing mayhem in the southern economy.
In essence what has happened in Ireland since 2013 due to the property crash a few years earlier, banks have been off loading non-performing loans as a way to repair their broken balance sheets. This works very well for the bank however not so good for the borrower.
What has struck me as a professional person working in this area over the past seven years is the lack of interest in particular from the local media platforms and range of journalists on reporting on this matter, in Northern Ireland.
Ulster Bank has to date sold over £20Billion of Non-Performing Loans and in total, in Ireland alone; there has been in excess of £100bn of loan sales. This is an incredible number, and over the next few months, this is going to increase yet again with the pending sale of Permanent TSB, AIB and more Ulster Bank loans.
My loan has been sold. What next?
An observation of this direction of travel by banks is that they appear to not only be selling impaired loans but we have also come across borrowers who have never missed a payment. One customer of ours, in 2017, had his entire property facility sold to an American private equity firm and he had never missed a payment in his professional life.
At the stroke of a pen, his loan was sold and he was asked to pay the loan back in full within twelve months. In essence the tremors of a loan sale are not felt at all by the bank; however the borrower is now in a very different space. The out-workings of the property crash and ultimate banking collapse that occurred in 2008, has meant that all kinds of loans including commercial loans, business loans, home loans amongst others have been sold to the highest bidder.
This purchaser would have bought your loan for a fraction of what was owed, and will spend the next number of months chasing you for the full amount. This is a highly stressful environment to be in.
It’s similar to your credit card company. If you stop paying your credit card, after a period of time the company will take a view and sell the debt. The new owner of that debt will then spend the next number of months and years going after you for the debt plus the accrued interest.
The whole area of loan sales is now prevalent in ROI media with Fianna Fail suggesting it will bring down the government if Permanent TSB goes ahead with their proposed loan sale in the next few months. In Northern Ireland, of course, we don’t have a government to bring down, and therein may rest some of the clues as to why this does not get more profile in this part of Ireland.
What we can do to help?
In essence, our own company, GDP Partnership, has been helping borrowers with banks since 2010. Eight years into this journey and we are now heavily involved in a new wave of business involving loan sales and trying to help all kinds of businesses and families hold onto their properties and their livelihood.
It is certainly a huge challenge facing Irish society right now, and from a borrower’s perspective, it’s vital they take the appropriate action before it’s too late.
Already we have seen the private equity firms increase their enforcement actions both in Dublin and in Belfast and this should not be a surprise to people who have an understanding of their business models.
Blackstone’s CEO Steve Schwarzman , who controls one of the most active funds in this space gave us all an insight into their mindset with the following contribution in the Business Insider December 2010;
"As we look at the current situation in Europe, we're basically waiting to see how beaten up people's psyches get, and where they're willing to sell assets. You want to wait until there's really blood in the streets.”
The above quote makes grim reading and it’s very obvious now given the most recent coverage of this issue in Ireland that you couldn’t really put this any better.
If your loan has been sold, you now must become a student of the process, and educate yourself on how you can retain control of your assets and your future. It is crucial that you engage with the right professional team who have a track record of success in this space and can advise you accordingly.
Our team is highly motivated and well placed to help you do just that.
Our Loan Sales team know what is expected and how to get you to where you want to go. We WANT to hear from you today because we WANT to help you today.