The MI5 of banking, the infamous credit control committee, has taken over loan reviews for Ireland’s vital SMEs based on mounting evidence of startling raids on credit facilities. It’s hard not to feel that your file has been subject to some form of rendition after a period of surveillance on your cash flows - that it’s personalized. In practice branches who deliver the bad news are mere middlemen devoid of power or discretion. The best they can do is to cower behind feeble excuses like they did their best, or that they recommended another course. But it’s all really just part of a game.

Behind the scenes a secret matrix, a scoring monster is fed data from the branches and if you happen to work in a newly black-listed sector of the economy, deemed high risk by these predators, your good record will be overwhelmed by that bad score.Here’s an edited version of an email I sent on Tuesday to one of the main bank branch managers after the bank announced it was pulling a modest overdraft facility and rolling it into a term loan for Robert (not his real name) a one-man business providing a highly skilled service in the film business and an award winning expert at his profession.

But first remember;

• Overdrafts are designed to help bridge the ups and downs in cash flows and are especially important in an economy where payment can be slow. It is nearly impossible to operate without one.
• Robert is married and in his early forties with a business track record that stretches nearly 20 years. His gross monthly cash flows average about five to six grand over the year and after paying costs including tax, levies and PRSI, he nets less than half of it to pay for a modest mortgage and the family lifestyle.

Dear Branch Manager
 
Robert has had an overdraft running during the worst trading conditions since the 1930’s, i.e. 2009 at a level of €6,000 to €8,000. Whereas you can argue that the “core” loan was €6,000 to €8,000, it’s a simple statement of fact that at no stage over his relationship with the bank has there been any missed payments in connection with credit facilities extended to him.
 
Separately, the €50,000 term loan for his equipment and which is now reduced to €40,000, has been fully maintained since the outset. You will be aware from examination of his accounts that he has managed his cash flows very well over this period. It is for this reason I cannot understand why the bank is demanding that the overdraft is cancelled and roll it into the term loan. This defies financial logic. I’m sending you this email as his advisor as well as to highlight what is really going on at the interface between the bank which is now being kept alive by the Irish taxpayer and customers like Robert. I look forward to hearing your comments.

I will keep you posted on the bank’s response.

Rip OFF Republic

Beware of any impending review dates on banking products. Watch out for cuts in deposit interest, rising interest rates, reduced credit or demands for repayment. The gloves are off. Everyone in a “high risk” sector is now a target. Your long history with the bank counts for nothing.

Government Reshuffle?

Changing sleeping pallets in Pompeii.