Budget reaction

08 April 2009
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Early indications from our customers are mixed.

Unfortunately the task ahead is difficult for us all.As a small open economy we are extremely exposed to the world economy.So not matter what we do at home the key to turning around our economy is greatly influenced by international trade.

Whilst the budget was certainly it might to be a step in the right direction and will help confidence.Confidence and information are closely linked.Once we have a degree of certainty about our take home pay we can start planning.

We agree with the establishment of a new asset management agency to look after the non performing development loans.On 02/03/2009 we suggested the following in our news items

'There is merit in setting up state controlled development bank for a limited period of time that might bring together the non performing developing land assets and tie in their development with our national development plan.Beyond this we do not see the merit of throwing in all non performing loans into a big pot'

This will help the banks focus on dealing with commerce. The price at which transfers occur is the big question but there is no reason that it should not be priced so that the state effectively guarantees a no loss situation over the medium term.

Of major concern is the banks lending to new and exiting business customers.It is too easy to say no and banks must shift their focus to finding ways to say yes to viable business propositions taking a medium term outlook,

We would really like to see strong marketing campaigns from lenders focusing on attracting new commercial customers.This is itself would add to consumer and business confidence.

Many businesses have had their turnover halved but this will not last and over the next couple of years turnover will return to more normal levels.

We also believe that the banks must be willing to look at propositions without personal guarantees or with restricted guarantees.This will lead to better underwriting .

We would also add that If we are to grow our economy the emphasis in lending must move away from property into commerce .The government have a key role to play in this change.