Wednesday, July 29, 2015

Repossession cases adjourned in April coming around again

There are 90 cases listed for hearing on the Cork County Registrar’s Civil Possession list today.  Of the cases listed most of them have been tracked at previously attended sittings back in April and were adjourned to today’s sitting.  Two of the sessions were summarised here. The reasons the cases were adjourned to today’s date are:

  • 5 were adjourned to allow a motion to change the name of applicant be submitted (mostly because the loan was sold to another party).
  • 26 were adjourned because alternative repayment arrangements were either in place or under negotiation.
  • 3 were adjourned because the respondent(s) had not been formally served notice of the legal proceedings in advance of the previous sitting.
  • 39 were adjourned under the practice direction of the circuit court where all legal proceedings involving homes are adjourned on their first appearance in court.
  • 11 of the cases were adjourned even though the bank sought to proceed with the application for the final possession order but had the case adjourned against their wishes.

The outcomes will be updated here later today with the 11 cases where the lenders previously sought final possession orders of particular note.

UPDATE:  Today’s session actually had 97 cases (as opposed to the 90 listed) and was completed in around two hours.

There were issues relating to the formal service of the legal proceedings to the borrowers in the seven cases added and two of the listed cases so these could not proceed.  There were two non-mortgage possession cases on the list so we are left with 86, all of which are in the previous outcomes listed above.

Eight of 86 cases heard were struck out.  It is not always stated why this action is taken.  Sometimes it is because the property has been sold or voluntarily surrendered and the repossession proceedings must end.  In a few cases today proceedings were struck out because of issues of jurisdiction (i.e. the Murphy judgement).  It is rare to hear of a case being struck out because repayments have resumed.  There are many cases where payments are being made and if these are as agreed such cases are usually adjourned to a later date or, in some cases, adjourned generally with liberty to re-enter which is akin to being struck out.

Of the remaining 78 cases the borrowers were absent from the court in 59 cases with the borrower present and/or represented in 19 cases.  The legal representatives of the banks sought adjournments in 58 cases for various reasons while there were 20 cases where they wished to proceed with their application for the final order for possession. Ten possession orders were granted and these are summarised below.

Orders Granted 29-07-15

None of the orders granted were contested.  Three of the cases were where the bank wished to proceed the last time the case was listed but it was adjourned. These included the one case with an order granted where the borrower was present today (#2 above). This borrower consented to the order and argued for the stay to be reduced from three months to one month! 

There were two cases (#3 and #6) where the bank wished to proceed at the last hearing but had the case adjourned in the presence of the borrower.  For today’s hearing these borrowers were absent and the orders were granted.

Four of these cases had previously been adjourned as per the practice direction and three of them were adjourned on request by the lender.  The borrowers were not present on either occasion.

Five of the ten properties with orders granted against them are vacant.  In most of these cases no payments had been received for significant periods – up to five years.  No payments had been made on the mortgages for any of these vacant properties since 2011.

In one of the cases (#5 above) it can be seen that a payment was made as recently as this month and almost €2,600 was paid in 2015 (almost 40 per cent of the amount due).  Even though the arrears are almost €70,000 and equivalent to more than five years of the current monthly payment if the borrower was present in court this order would not have been granted.  A nine month stay was put on the order.

There were 10 other cases where the lenders wished to proceed to the final order for possession but the cases were adjourned.  In five of the cases this was the second occasion observed where the bank wished to proceed and the case was adjourned.  These cases are summarised below. [Click to enlarge]

Proceed-Adjourned Cases 29-07-15

Most of these cases have pretty substantial arrears and some have gone significant periods with no payments.  However, turning up in court and having some recent payments or indicating a capacity to make some repayments will likely result in an adjournment.  It is not clear that #10 above exhibited either of these.  Of course, an adjournment today does not mean there won’t be an order granted at the next sitting.

There were also three cases adjourned from previous sittings where the banks had sought a final order for possession at the last hearing but were looking for an adjournment at today’s sitting citing “resumed payments”, “talks on-going” and “engagement with borrower”.

So the summary of the 95 cases is:

  • 9 couldn’t proceed because service hadn’t been completed
  • 10 orders for possession were granted
  • 8 cases were struck out
  • 58 cases were adjourned by the lenders
  • 10 cases were adjourned by the County Registrar

UPDATE #2: The last hearing before the summer break took place on July 30th. Hearings will recommence in October!  There were 87 cases listed yesterday. The outcomes were:

  • 75 adjournments
    • 63 adjourned by the lenders
    • 12 adjourned by the (visiting) County Registrar
  • 6 cases were struck out
  • 6 orders for possession were granted.

There were 18 cases where the lenders wished to proceed with their application for an order for possession.  These are summarised in the table below.  They are divided between cases where the borrower was absent and cases where the borrower was present and/or represented.

It can be seen that orders were only granted against borrowers who were absent.  All borrowers who were presented or represented in court had their cases adjourned.  There were two cases adjourned where the lenders wished to proceed in spite of the borrower being absent.

Here are the details that were provided to the court. [Click to enlarge]

Cases Proceeded 30-07-2015

Repossession cases adjourned in April coming around again

There are 90 cases listed for hearing on the Cork County Registrar’s Civil Possession list today.  Of the cases listed most of them have been tracked at previously attended sittings back in April and were adjourned to today’s sitting.  Two of the sessions were summarised here. The reasons the cases were adjourned to today’s date are:

  • 5 were adjourned to allow a motion to change the name of applicant be submitted (mostly because the loan was sold to another party).
  • 26 were adjourned because alternative repayment arrangements were either in place or under negotiation.
  • 3 were adjourned because the respondent(s) had not been formally served notice of the legal proceedings in advance of the previous sitting.
  • 39 were adjourned under the practice direction of the circuit court where all legal proceedings involving homes are adjourned on their first appearance in court.
  • 11 of the cases were adjourned even though the bank sought to proceed with the application for the final possession order but had the case adjourned against their wishes.

The outcomes will be updated here later today with the 11 cases where the lenders previously sought final possession orders of particular note.

Wednesday, July 22, 2015

Cork Repossession Hearing - 22nd July 2015

Repossession hearings continued with the County Registrar in Cork today.  This is the 12th session attended and although the overall pattern shows little sign of changing (adjourn, adjourn, adjourn...) some other outcomes were more prevalent in today’s session.

There were 100 cases listed for today with one additional case raised at the end of the list though one of the original cases listed is a discontinued case that should not have been listed.  Thus there were 100 cases and borrowers where either present or represented in court in 43 cases.  There were 57 cases where the borrowers were absent.

Of the 100 cases the initial actions of the lenders were:

  • 65 applications for adjournments
  • 13 cases to be struck out
  • 22 cases seeking the final order for possession

The reasons for the adjournments were mainly because alternative repayment arrangements had been entered into or were being negotiated after the submission of standard financial statements.  Adjournments were also sought in a couple of instances to allow the sale of properties by borrowers to conclude.  In some cases the adjournments were to allow for a change of name of the applicant in cases where loans had been sold.

Of the 100 cases the outcomes were:

  • 80 cases were adjourned
  • 13 cases were struck out
  • 6 possession orders were granted
  • 1 case was held in camera.

It can be seen that possession orders were granted in less than one-third of the instances where the lenders proceeded with the application for the final order for possession (6 out of 21 with the outcome of the other unknown). 

Of the six possession orders granted none were contested.  In two cases the borrowers were present and/or represented and consented to the possession orders while the borrower was absent for the other four orders that were granted.  The details, where provided, are summarised below (click to enlarge).

Possession Orders 22-07-15

Of the 80 cases adjourned most were adjourned to dates in November and December with a few pushed back to February of next year.  There were ten cases which were ‘adjourned generally’.  This means no new date was set but the applicant is at liberty to re-enter at some stage in the future.  Most of these were because alternative repayments arrangements had been entered into and were being adhered to by the borrower.

There were several other cases where the lender sought an adjournment because an alternative repayment arrangement was being entered into.  However when the legal representative of the banks were asked if repayments were being made at present they said such information was not part of their instructions.  It is likely that if repayments were being made that the County Registrar would have adjourned these cases generally rather than to dates in November and December.  Information about current payments would seem to be fairly fundamental to repossession proceedings but it was not available to the court.

Most of the 15 instances where the lenders wished to proceed to the final order but saw the cases adjourned by the County Registrar were because the borrower was present and/or represented in court.  In one such a case a borrower had made no repayments since 2010 and had accumulated arrears of more than €48,000.  The borrower said their circumstances had changed and hoped that things could improve.  The case was adjourned to the 26th of October.

One case was adjourned against the wishes of the lender even though the borrower was not in court to present their circumstances.  This was for a loan with €193,000 outstanding with arrears of €36,000.  The loan first went into default in February 2011.  Various alternative repayments had been entered into in 2010, 2011 (arrears capitalisation), 2012 (interest only) and in February 2014 a reduced payment had been agreed.  Intermittent repayments were made and when reviewing the account statement the County Registrar said that “significant payments” were made in 2014 and that the arrears were “not particularly large”.  The property had previously been sale agreed but the purchaser had withdrawn.  A standard financial statement was submitted when the previous restructuring arrangements were put in place but the lender now deemed the borrower to be ‘non-cooperative’ under the CCMA.  No repayments had been made since January 2015.  The Country Registrar suggested that something may have changed in January of this year given the “significant payments” made in 2014.  The case was adjourned to the 16th of December.

As is usual the cases were heard very quickly and the session lasted just over 90 minutes.

Wednesday, July 8, 2015

And whatever you’re having yourself – a stat for every argument

There are lots of claims that can be made about the Irish economy and most of them can be supported with some sort of statistical evidence – even opposing ones.  Here we will consider four such claims:

  • Ireland is a low-pay economy.
  • Ireland is a high-productivity economy.
  • Ireland is a low-investment economy.
  • Ireland is a high-profit economy.

All of these are entirely right (and as we will see later entirely wrong – well three of them anyway). 

Let’s look at aggregate data from Eurostat on ‘the business economy’.  This is NACE sectors B to N (excluding K) and S95.  And from this we can derive four measures of the economy.

  • Labour share: Personnel costs as a proportion of gross value added
  • Wage adjusted labour productivity: Value added as a proportion of personnel costs.
  • Investment rate: Gross investment in tangible assets as a proportion of gross operating surplus.
  • Gross operating rate: Gross operating surplus as a proportion of turnover.

Of course, the second is just the inverse of the first so doesn’t add anything but let’s not worry about that.  So let’s go through the claims one-by-0ne.  First, Ireland is a low-pay economy. [Recall that all the statistics here relate to ‘the business economy’.]

Labour Share - Total

Yes, there we are right down at the bottom alongside Romania and Bulgaria.  Let’s invert this and look at a simple wage-adjusted measure of labour productivity – what is value added as a proportion of labour costs?

Labour Productivity - Total

And that says the same thing as the first chart but here we say that relative to personnel costs firms in Ireland produce a lot of gross value added.

Okay, let’s look at something a bit different: the investment rate.  What proportion of gross operating surplus is set aside for investment?

Investment - Total

Now, we’re right down at the bottom.  No country in the EU has enterprises investing a smaller proportion of their gross operating surplus in tangible assets than Ireland.

But this lack of investment doesn’t seem to be harming profits.  Here is gross operating surplus as a share of turnover: the gross operating rate.

Profitability - Total

And we jump from last to first.

So there we have it.  There really should be no need to go any further. Ireland is a low-pay, high-productivity, low-investment, high-profit economy.  But we have to have “but on the other hand”.  And the caveat to the above findings is this chart because ‘the business economy’ in Ireland is different to other countries: more than half the gross-value added in the business economy in Ireland comes from foreign-owned companies.

Value Added Dom v For

So what if we look at our pay, productivity, investment and profit measures for domestically-controlled and foreign-controlled enterprises?

Well, this happens for the labour share.

Labour Share - Dom v For

Whoa.  Ireland is top (well one from the top) AND bottom.  Ireland has the second highest labour share for domestically-controlled enterprises in the EU.  Only domestic French companies devote more of their gross value added to personnel costs. 

On the other we can see that Ireland has the lowest labour share for foreign-controlled companies in the EU.  Does anyone think that there is low-pay in the foreign-controlled companies in Ireland?  The labour share would suggest they are but clear they are not.  Any such is the scale of the value added by foreign companies in Ireland that their labour share means Ireland’s position in the overall table is at the bottom.  However, if we just look at Irish-owned firms (who employ 78 per cent of people in the business economy) the labour share in Ireland is right at the top.

Our simple measure of wage adjusted productivity just gives us the inverse of the labour share but let’s just show it anyway.

Labour Productivity - Dom v For

So Irish-owned firms are towards the bottom of their peer group and we can see that the productivity in foreign-owned firms in Ireland is “off the chart”.

Next we turn to profitability.

Profitability - Dom v For

Irish firms aren’t particularly profitable and, once-again, we top the table for foreign-controlled firms.  The breakdown of gross operating surplus between domestic and foreign firms in Ireland is an outlier.

Gross Operating Surplus Dom v For

In Ireland, just 28.5 per cent of the gross operating surplus generated in the business economy comes from domestic enterprises.  The average for the other 27 countries in the EU is 71.5 per cent.

Why are Irish firms so unprofitable?  Well, maybe our last measure will help answer that: the investment rate.

Investment - Dom v For

Not really.  Irish firms appear to be moderate investors.  They rank 17th in the EU28 and 6th in the EU15.  Their investment rate is 53 per cent compared to an EU28 mean of 61 per cent – though we should note that this only includes investment in tangible assets.

So, aggregate data shows the Irish economy to be low pay, high productivity, low investment and high profit.  However, if we want to describe Irish firms (and again 78 per cent of people employed by enterprises in the business economy are with Irish-controlled firms) then we would say that Irish firms are high pay, low productivity, low profit and moderate investment – but if you want to say the opposite we’ve a stat for that too!

Finally, here are the wages and profits of domestic companies as a proportion of gross national income (GNI).

GOS Personnel Costs to GNI Domestic

Any chance of a “low-profit commission”?

Friday, June 26, 2015

The State of the PCAR Banks

The three banks in which the State continues to hold a stake are AIB, BOI and PTSB (collectively the PCAR banks).  Here is a summary of their aggregate balance sheet position for the past five years.

PCAR Balance Sheet

The main changes are pretty clear.  Their aggregate balance sheets have declined by just over €100 billion since the end of 2010.  On the asset side this has mainly been achieved by a reduction is loans due (repayments, write-offs, NAMA transfers and other sales).  The big move on the liability side has been a reduction of €80 billion in the amount owed to the Eurosystem.  Customer deposits are up around €15 billion while debt liabilities are down around €30 billion.

Net equity in the banks is currently around €23 billion with a combined CT1 ratio of 14.5%.  The loan-to-deposit ratio has fallen from 192 per cent to 123 per cent.

Here is their aggregate income statement for the past five years.

PCAR Income Statement

As has been widely reported the banks “returned to profitability” in 2014 (well AIB and BOI did at any rate).  The €1.6 billion positive net income was mainly driven by provisioning behaviour which declined from €4.5 billion in 2013 to just €0.3 billion in 2014 with the banks writing back provisions in relation to some elements of their loan books.

Selling banks with €22.6 billion of net equity and €1.6 billion of net income in their most recent year should generate substantial funds but the amounts will be unclear as long as the problem of dealing with non-performing loans (€45.7 billion or 23.3 per cent of gross loans) remains.

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