Irish Banking System

According to the Daily Telegraph of last week the Irish property slump is creating dangers for the Irish Banking system. Prof. Nouriel Roubini in an interview in the recent issue of Business & Finance magazine says we are potentially facing greater problems than the United States because our construction industry comprises a larger share of the our economy. Given that US Banks are now failing, what is the future for Irish financial services? An international banker interviewed in the Sunday Business Post states that although Irish Banks have a minimal exposure to the sub-prime crisis, what are regarded as Irish prime mortgages will be shown to be less than that given the 100% lending that was taking place and the fall in the value of property over the last 12 months. With the fall in the loan-to-value ratios and defaults coming on stream, banks will start taking hits. In addition because of the social partnership the Government will not allow the banks to repossess large numbers of homes causing further hits for the banks. All this conjecture leads to the question “are our banks going to fail”?

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