The Financials Unshackled Weekender | Issue 62 (22nd Sep 2025) - UK Banks @ BoA Financials Conference and Much More
The INDEPENDENT voice on banking developments - No stockbroking, no politics, no nonsense!
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Welcome to Issue 62 | ‘The Financials Unshackled Weekender (22nd Sep 2025)’ - your weekly pack for critique and curation of key banking developments.
Thanks for reading Financials Unshackled - by John Cronin at SeaPoint Insights! Subscribe for free to receive new posts and support my work.
The main focus of this week’s note is on takeaways from the UK banks’ fireside chats at the BoA Financials CEO Conference in London last week together with a sprinkling of select snippets on other important news developments.
To unshackle your understanding of the last week's banking developments please read on to explore critiques, curated insights, your calendar for the week ahead, and to finish with some light entertainment!
🔎 The Critique 🔎
🇬🇧 UK Banks - Fireside Chats at BoA London Conference 🇬🇧
What Happened?: BoA held its annual Financials CEO Conference in London last week. Four of the UK banks (NWG, LLOY, BARC, STAN) broadcast fireside chats that their senior executives held with the BoA analyst. Transcripts available for NWG here, LLOY here, and BARC here - and a webcast replay link for the STAN session is available here. The focus here is on what we learned from the domestic names, i.e., NWG, LLOY, and BARC.
Key Detail & Perspectives: I reported in Financials Unshackled Issue 61 here on key take-aways from the Barclays NY conference in early September. Given the closeness of the events there is naturally some repetition so I zone in on just a few key points of interest by company below.
NatWest Group (NWG) CEO Paul Thwaite - 08:00 BST Tuesday 16th September
Loan Growth: Thwaite reaffirmed that management expects that the bank can continue to churn out growth in each of its three key segments: i) Retail Banking - mortgage and unsecured loan stock share remain below natural market share based on retail deposits; broadening of proposition is supportive of mortgage book growth (e.g., extension of BTL offering through forward flow agreements, increased focus on first-time buyers); ii) Commercial & Institutional - very strong franchise with leading market positions in lending to start-ups and mid-market businesses; deep sector specialisms and nationwide RM presence conducive to continued growth; and iii) Private Banking & Wealth Management (PBWM) - sees potential to grow customer numbers and to sell more product into the existing customer base and of the view that there is a clear opportunity here partly because growth is coming from a low base but also due to regulatory changes in relation to retail investment stimulation (e.g., the AGBR) .
Operating Costs: Strong improvements delivered from a productivity and efficiency standpoint in recent years; cost extraction was historically focused on exiting products / businesses / regions but BAU efficiency is the main focus now. Management is very focused on continued delivery of efficiencies, which creates headroom to invest in the business.
Capital / M&A: Reiterated the CFO’s message from the Barclays conference the prior week to the effect that NWG is very comfortable operating at the lower end of its target CET1 capital ratio range of 13-14% - and that, while management welcomes the FPC review of the capital framework, he doesn’t expect it to result in a sudden meaningful change in capital requirements. Thwaite reiterated previous remarks around acquisition opportunities being subject to a very high bar (referencing the 1H25 18.1% RoTE print) and gave some more colour on the kind of deals that would be most desirable: i) opportunities to add to the highly digitised scalable retail banking platform at a relatively low marginal cost; and ii) options to catapult the PBWM growth objective though Thwaite caveated this with the challenges NWG faces in terms of securing such deals within acceptable valuation parameters (relative to NWG’s own implied cost of equity). Indeed, it is notable that a report in the FT in August cited NWG as a potential acquirer of Evelyn Partners (Permira and Warburg Pincus have reportedly appointed Evercore to run a sale process for the wealth management firm, with discussions with potential buyers set to commence in October, according to this article in Financial News on 4th September). As an aside, it was also interesting to read on Sky News on Friday here that NWG is apparently seeking to sell its 85% shareholding in Cushon, the workplace pensions provider. Thwaite also remarked that opportunities to grow on the commercial side are less obvious given the strength of NWG’s franchise and the size of its market shares.
Lloyds Banking Group (LLOY) CEO Charlie Nunn - 08:45 BST Tuesday 16th September
Nunn spoke about the progress made from a growth and a returns accretion standpoint in the context of the existing 5Y strategic plan (2022-26), referencing management’s confidence in delivering a >15% RoTE for FY26. He noted that the next 5Y strategic plan will be communicated in 2026, ahead of the FY26 results and one senses that growth and cost efficiencies, and capital returns will be front and centre of the next strategy iteration.
Growth: Nunn reiterated the CFO’s remarks at the Barclays conference in relation to the differentiated (longer duration) nature of LLOY’s structural hedge, which is set to provide a meaningful income tailwind over the coming years. Nunn also highlighted again that LLOY has purposefully exposed itself to the higher growth areas of the economy and observed that further investment and innovation (including in AI) is expected to support continued growth momentum.
Costs: Nunn noted that the combination of ongoing cost savings and a slowdown in investment spend is why management expects that the cost base will flatten in FY26, noting that another wave of efficiency in financial services is coming. He later noted, in the context of the next strategic plan, that the combination of generative and agentic AI will provide improved productivity (and growth) opportunities and that LLOY is “really excited” about it. Still though, it didn’t seem that he wanted to overly elaborate on the topic at this juncture ahead of the next strategic plan but a question from a member of the audience saw him open up a bit more - and he spoke about how LLOY is “investing significantly around it”, running 800 live AI models currently but he wouldn’t be drawn on quantifying the share of wallet dedicated to this investment.
A view on consensus costs: Notably the company-compiled consensus data as of 9th July shows that sell-side analysts are expecting operating expenses to grow by just 1.3% in FY26 (following expected growth of 2.9% in FY25) but consensus does not have LLOY reaching its <50% CIR target for FY26 - I expect sell-side analysts will remain cautious on LLOY’s FY26 costs, though, given recent management commentary and their degree of control over the cost base, I do think we will see that consensus number gradually nudge down a bit (though I don’t think we will see much moderation in the FY27 consensus costs number prior to the unveiling of the next strategic plan at least).
Capital Returns: A member of the audience asked Nunn would LLOY consider reviewing capital distribution commitments twice annually (like peer banks) instead of just once per annum and Nunn indicated an openness to revisiting its approach. He had earlier characterised LLOY as a strong and sustainable
capital returns business through-the-cycle - and also highlighted a few areas where bolt-on acquisitions could be constructive from an investment case perspective (e.g., Insurance & Pensions, Wealth, SME Financing).
Barclays (BARC) Finance Director Anna Cross - 08:45 BST Wednesday 17th September
RWA Growth / Control: Cross spoke at the start about the growth opportunities that BARC is seeing in the UK - reminding the audience that Business Banking has now started to grow (with two consecutive growth quarters in the YTD) following four successive quarters of mortgage growth. She set out some details regarding the growth levers in mortgages (Kensington supporting more complex higher LTV product (incl. BTL), new more efficient broker application process and consequent NPS improvement) and how BARC is working to capture more opportunities from the linkage between its Private Banking and Wealth Management business and the Premier Banking side of Barclays UK. Cross emphasised the importance of growth in the context of the eventual dissipation of structural hedge income tailwinds in the medium-term. In terms of RWA control (in the context of the objective to reduce the proportionality of RWAs attributable to the IB to c.50% by end-FY26 - from 56% at end-1H25), Cross reminded us that IB RWAs have been flat for 3.5 years with Credit Risk RWA shrinkage offsetting Markets RWA growth and she also noted that there is a significant focus on growing capital-lite areas of the IB like treasury, DCM, ECM, and M&A.
Wealth Growth: It was interesting to listen to Cross speak in more detail about the opportunities BARC sees in front of it to grow in the UK Wealth / digital investing space. In the context of the AGBR and excess savings, Cross noted “…there are four million customers who have, we believe the propensity if you like, to want to invest, or the requirement to have some kind of investment advice. They are already within the confines of our business, even without going out to attract new customers.”. Cross wrapped up on this by noting that management sees the opportunity to drive improved growth here in future years, probably beyond the life of the current strategic plan, as really significant. Indeed, BARC has been using its initiative wisely in the context of working with government to stimulate more retail investment as this 14th August press release, which flags the CEO of BARC’s Private Bank and Wealth Management business Sasha Wiggins’ appointment as Chair of the UK Retail Investment Campaign, attests to.
Cost Containment: Cross provided helpful commentary in an operating costs context, observing that management’s two key focus points in this respect are: i) streamlining and upgrading BARC’s technology and extricating the bank from the burden of legacy systems; and ii) processing efficiencies. On the latter, Cross later referenced the mortgage application process enhancements as an example of straight-through-processing efficiencies in the context of a customer journey - and she also commented on investments in GenAI facilities in this regard. Cross, once again, noted that FY26 operating costs are expected to be down y/y, noting that “…the net impact between efficiency and inflation…is more positive in 2026 than it is in 2025…and then there's been a real step change in investment in 2025 that I wouldn't expect to replicate in 2026”. Latest company-compiled consensus data (as of 18th July) shows that consensus is modelling a gentle 0.8% rise in operating costs (ex-bank levy and L&C costs) in FY26, which I suspect will come down a little bit further over the coming months.
📌 The Curation 📌
🇬🇧 UK Unfiltered - My Top Picks 🇬🇧
1️⃣ Sector Snippets:
Hamptons reported last week here that rents across Great Britian fell by 0.4% y/y in August, taking average monthly rents down to £1,387. This represents the ninth consecutive month where rental growth has lagged inflation and is unhelpful for landlord profitability and BTL property demand - and an unwelcome trend for BTL specialist lenders including Aldermore, OSB Group (OSB), Paragon Banking Group (PAG), Shawbrook, and Together. However, this trend has been clearly emerging for some time.
2️⃣ Company Snippets:
Close Brothers Group (CBG) issued a RNS on Friday 19th September noting that the publication of its preliminary FY25 results (for the year ended 31st July) has been pushed out by seven days to 30th September as “The group's auditor has requested additional time to complete its standard audit procedures”.
Funding Circle Holdings (FCH) issued a RNS on Wednesday 17th September here noting that it has renewed its long-standing partnership with Waterfall Asset Management and BNP Paribas with a further forward funding commitment of £750m.
On Friday 19th September Investec (INVP) published a pre-close trading period for the five months to 31st August here ahead of its interim results to 30th September, which are scheduled to be announced on 20th November. 1H25 results are expected to be in line with the prior period. This didn’t do much to satisfy investors with the stock seeing selling pressure in response to the update.
Sky News reported here on Tuesday 16th September that IDC Ventures, a 12% shareholder in Curve, the British fintech, is seeking the removal of Lord Fink, the City grandee who chairs it, amid an escalating row over its prospective £120m sale to Lloyds Banking Group (LLOY). Separately, in LLOY-related news, Bloomberg reported here on Thursday 18th September that the bank is selling a SRT linked to c.£500m of CRE loans - this is consistent with the continued capital optimisation strategy that the CFO has discussed on several earnings calls / at several conference sessions in recent years.
Finextra reported here on Monday 15th September that Metro Bank (MTRO) has settled a legal claim with the US software firm Arkeyo over allegations that it leaked the company’s coin counting technology to a rival firm. The company has not issued a RNS or a press release on this matter. While the article notes that financial details related to the settlement have not been disclosed it is odd to see that that web page title (click on the above link for it) says that the bank paid £24m to settle the case (though that may well just be due to the stated value of the case). In terms of background, Arkeyo filed a civil suit against MTRO in June 2017 in the US District Court for the Eastern District of Pennsylvania and MTRO’s 1H25 report (published on 6th August) noted in Note 13 ‘Contingent Liabilities’ that Arkeyo alleged, “…among other matters, that we misappropriated certain of Arkeyo’s trade secret technology relating to money counting machines (i.e., our Magic Money Machines). Arkeyo has sought damages in respect of a number of claims and attempted to serve the US proceedings on us in the United Kingdom. This claim was decided in our favour on jurisdictional grounds. However, Arkeyo has filed a new claim with a stated value of over £24 million. We believe Arkeyo LLC’s claims are without merit and are vigorously defending the claim.”.
Financial News reported here on Monday 15th September that Monument Bank’s CEO Ian Rand noted that it has been eyeing NY for a potential float in the coming years but has not ruled out London as a listing location either. These comments follow Rand’s comments to CityAM on 27th February last here that the bank’s initial instinct to consider NASDAQ for a potential listing is predicated on a desire for “…the smoothest, simplest journey onto a listing but then, critically, you’re looking for that depth of market”. The CityAM piece followed a Sky News report of 21st February here noting that the bank is in talks in relation to a £200m pre-IPO private Series C fundraising ahead of a potential NASDAQ listing, which it is targeting by the end of 2027 - with a secondary listing on a major Middle Eastern or Indian exchange said to be a possibility for 2028. Notably, The Banker reported here on 30th July that Monument Bank is eyeing its first full year of profitability in 2026.
The FT reported on Wednesday 17th September here that the Nationwide Building Society Chair Kevin Parry attended a breakfast early last week hosted by Sanctuary Counsel, a reputation consultancy, to help attendees understand the Reform UK party’s approach to business - this makes him one of the first senior bankers in Britain to publicly engage with the party, though it seems inevitable that many others will follow his lead. Separately, Nationwide announced mortgage rate reductions last week (see This Is Money article here) following the BoE’s decision to keep rates on hold - this goes against the grain of what we have been seeing in the market more recently and, interestingly, it follows the Lloyds Banking Group (LLOY) CFO’s recent remark at the Barclays conference that indicated he has some confidence in front book mortgage margin sustainability (on the topic of the risk of structural hedge income tailwinds ‘givebacks’ more broadly), referencing a large player whose structural hedge is undersized on a relative basis.
Bloomberg reported on Tuesday 16th September here that, according to investor documents that the news agency has seen, Revolut delivered £1.01bn of revenues in 2Q25, which was +46% y/y. Separately, Bloomberg reported on Thursday 18th September 2025 here that Nvidia’s CEO commented on Thursday that the company will invest in Revolut’s next funding round. It’s also worth reading this interview on tech.eu with James Gibson, the GM of Revolut Business - it was interesting to read that Revolut Business now accounts for 15-20% of total revenues, that it is adding more than 20,000 companies a month, and that >50% of its business customers are primary account holders.
Sky News reported on Friday 19th September here that Shawbrook has commenced institutional investor meetings ahead of a potential 2H25 IPO - but the article noted that sources close to the company have indicated that it is increasingly plausible that the flotation will be pushed out to 2026 given the late date (26th November) of this year’s Budget. The key question, in this respect, is surely whether investors will discount their valuation of Shawbrook to account for the risk of a higher bank levy / other taxes. My own sense is that Treasury will be loathe to burden smaller lenders who have operated with one hand tied behind their back for years with higher taxes (if a higher levy is introduced - which is, by no means, a fait accompli - could the £100m pre-tax profits floor be raised further I wonder?). However, the reality is we are facing policy uncertainty until the Budget is announced.
Together Financial Services reported an upbeat set of results for the 12 months to 30th June 2025 here on Thursday 18th September. Underlying (u/l) PBT came in at £216.1m, up from £200.9m the prior year - driving an u/l RoTE of 14.1%, up from 13.7% in the prior year period. Net loans were +7.2% y/y to £7.9bn.
3️⃣Shareholding Changes of Note:
Barclays (BARC) RNS of 19th September: Taylor Wright (Global Co-Head of Investment Banking) sold 23,855 shares at a price of 383.8p per share on 18th September netting him gross proceeds of c.£90k.
Barclays (BARC) RNS of 18th September: Taalib Shah (Group CRO) sold 35,898 shares at a price of 374.5p per share on 17th September netting him gross proceeds of c.£135k.
🇮🇪 Ireland Unvarnished - My Top Picks 🇮🇪
1️⃣ Sector Snippets:
The Central Bank of Ireland (CBI) published ‘Trends in SME and Large Enterprise Credit and Deposits’ for 2Q25 here on Tuesday 16th September. The most striking feature of the release was that the outstanding stock of SME credit on banks’ balance sheets stood at just €17bn at end-2Q, the lowest outstanding amount since the series began in 2015. While the recent reduction is likely related to fears in relation to the economic outlook as well as rising costs, more broadly, one important reason (amongst other reasons) for subdued credit demand is the risk aversion of the mainstream lenders as the latest report from the Credit Review of 18th June 2025 discusses here. The Sunday Times reported on the development here, with some comments from local sell-side analysts.
I set out my views in Business Post here on Friday on why I think the Irish banks won’t see any tax hikes in the upcoming Budget on 7th October. On DTAs usability I note that “….my research indicates that any move to restrict DTA usability could have a highly significant impact on certain multinationals operating in Ireland. It would be challenging – though by no means impossible – to target any change at the banking sector in isolation, especially given a carve-out would presumably be seen to be needed for PTSB. Government will likely calculate that the safer play is to do nothing.”. And, on the current €200m annual levy, I note: “There is, of course, always a risk that the €200 million annual levy could be increased again. However, PTSB, the only bank in which the government retains a shareholding, would be disproportionately affected by any such move – at a time when investor interest appears to be building nicely. Any increase beyond a token amount would be problematic, so there seems little point in meddling.”.
Well worth reading the Founder & CEO of NestiFi and Synaptic Finance Niall Dennehy’s op-ed on the Irish banks’ impending Zippay initiative in the Business Post here on Thursday 18th September. Dennehy argues that the initiative is effectively copycatting and symptomatic of the lack of innovation amongst Irish banks. He also touches on a number of ways in which the payments scheme could have shown innovative prowess. Dennehy makes some solid arguments in my view. I would add: i) the impetus to invest significantly in innovation is typically lacking in businesses facing limited competition today; and ii) leadership appointments in the sector tend to prioritise risk management and political considerations over disruptive or innovative characteristics.
2️⃣ Company Snippets:
The Irish Times reported on Thursday 18th September here that Nua Money, a local mortgage lender, is securitising c.€300m of mortgage loans. Notably, 16.1% of the loans being securitised are to self-employed borrowers, 11.4% involve an element of equity release, and 4% relate to debt consolidation by borrowers. The average loan size is almost €283k, average LTV is 70.6%, and the average asset yield is 4.6%.
PTSB issued a press release on Tuesday 16th September here noting that it raised €300m from its inaugural 10.25NC5.25 Green Tier 2 issuance at a 3.875% coupon. The issue was 11.5 times oversubscribed, with orders of almost €3.5bn from a broad range of c.200 international investors. This is the highest ever level of oversubscription for a EZ bank Tier 2 issuance. Separately, PTSB is offering to buy back its existing €250m Tier 2 instrument from investors ahead of its scheduled call date in May 2026 (details here) - this is expected to settle on Wednesday 24th September. PTSB’s fresh Tier 2 issuance and its offer to buy back the existing Tier 2 instrument in issue are consistent with the capital optimisation messages set out at the stage of the bank’s 1H25 results. Additionally, PTSB’s slide deck for the BoA Financials Conference last week is available here and it is also notable that the bank has significantly reduced pricing on some of its consumer loan products, according to this press release - presumably in a bid to bolster volume growth.
🇪🇺 Europe Unbound - My Top Picks 🇪🇺
1️⃣ Select Snippets:
Bloomberg reported on Thursday 18th September here that Deutsche Bank’s CFO James van Moltke commented at the BoA conference last week that the changes to the leverage ratio rules in the US could give US banks “more capacity, perhaps, to support their markets clients”, disadvantaging European investment banks. This has been topical of late in a Barclays (BARC) context too - I noted the following on this matter in my write-up on BARC’s 2Q update in Financials Unshackled Issue 55 here: “A question was asked on the earnings call about how BARC feels about its competitive position in the IB in the event that US competitors ‘have more leverage handed to them’ by virtue of US Enhanced Supplementary Leverage Ratio changes (Paul Davies at Bloomberg penned an interesting piece on this a few weeks ago here). I felt that the Finance Director’s comments in response to the effect that management is confident in its ability to compete effectively (with some detail) were not enormously convincing and that this is a competition risk.”. In a somewhat related vein BARC has also been fielding lots of questions regarding its commitment to its US Cards Business of late too.
Reuters reported on Friday 19th September here that EU finance ministers have agreed a roadmap for a digital euro. The Business Post reported on Saturday 20th September here that Brian Hayes, Head of Banking & Payments Federation Ireland (BPFI) has welcomed the certainty that the agreement brings but notes that future costs for the banks must be minimised. This follows an article in the Business Post on Friday 19th September here reporting that the Irish banks are nervous around the associated costs of the digital euro project and are anxious that it could crowd out the mobile payment scheme, Zippay, that is due to be launched in 2026. However, one suspects the predominant fear amongst European banks is deposit attrition. In somewhat interrelated vein, a few good articles on stablecoins caught my eye again this week - I recommend reading this piece from The Wall Street Journal and this piece from The Financial Brand, both of which were published on Monday 15th September.
Sharon Donnery, Member of the ECB Supervisory Board, spoke on Monday 15th September on how the ECB and national supervisors have developed a draft Guideline on how legacy NPLs at smaller banks (LSIs) should be supervised, building on the concept of calendar provisioning which has been applied to larger banks. The language in Donnery’s speech is pragmatic - noting that the draft Guideline is “…risk-sensitive, proportionate and carefully tailored to LSIs”. Transcript of Donnery’s speech here.
Michael Theurer, Executive Board Member of the Bundesbank, penned a piece in the FT on Monday 15th September here calling for simplification of European banking regulations whilst preserving the resilience of the system. He calls out three potential reforms which could reduce complexity - using only CET1 capital for meeting going concern capital requirements, the separation of capital and resolution requirements, and the merger and simplification of capital buffers. There is some sense in the proposals but it is also feared that there could be unintended consequences outside of Germany with some banks potentially facing a CET1 shortfall as noted in Financials Unshackled Issue 61 here.
Patrick Montagner, ECB Supervisory Board Member, provided a short contribution to Eurofi - which was published by the ECB on Wednesday 17th September here. Montagner’s focus was on the interlinkages between banks and NBFIs and he notes that “Banks now serve as counterparties in foreign exchange and interest rate swap networks, provide prime brokerage services with margin financing and maintain direct exposures to NBFI-issued instruments. These connections create amplification mechanisms that could transform localised shocks into system-wide disruptions.”, going on to flag concerns in relation to ‘layered leverage’ where “…seemingly straightforward exposures become intricate networks of related risks sharing common vulnerabilities”.
🌎 Global Unpacked - My Top Pick 🌎
1️⃣ Could UBS seek out a change in domicile?
There has been plenty of coverage of the expected trajectory of UBS’s capital requirements over the late 2028 / early 2029 through 2034-37 period in recent times. However, this detailed Bloomberg piece from Tuesday 16th September is an excellent brief on the matter and discusses potential contingency options that the bank may be contemplating including a potential transaction with a non-Swiss bank to facilitate a change in domicile (useful ‘Explainer’ piece on Bloomberg here too). The UBS CFO’s comment at the BoA Financials Conference on Tuesday to the effect that “We are looking at every option available to us including the costs and trade-offs of each” (as reported by Bloomberg) and Cevian Capital’s Co-Founder Lare Foerberg’s comments (as reported by Bloomberg) to the effect that the Swiss authorities “know full well that the proposed, extreme capital requirements mean that UBS will have to leave. They simply don’t want to say it” have elevated the matter. A follow-up piece in the FT on Thursday 18th September here reported that Cevian Capital has remarked that it is “not viable” to run a large international bank from Switzerland and that, unless the Swiss authorities’ position changes, UBS would have “no other realistic option” but to leave. I suspect Cevian’s reported comments are more likely to be geared at exerting pressure on the Swiss authorities than on the UBS Board. It seems to me much more likely that this will end up in some level of dilution of the intended uplift in UBS’s capital requirements rather than UBS actioning the nuclear re-domicile option though it feels likely it will be a long drawn-out affair and bank management will surely maintain that a change in domicile is a credible option.
📆 The Calendar 📆
Look out for these in the week ahead:
🇬🇧 Tue 23rd Sep (07:00 BST): Mortgage Advice Bureau (MAB1) 1H25 results for the six months to 30th June 2025
🇪🇺 Thu 25th Sep (12:00 BST): ECB Monetary developments in the euro area - August 2025
🇮🇪 Fri 26th Sep (11:00 BST): Central Bank of Ireland (CBI) Mortgage Arrears Statistics - Q2 2025
🍺 The Closer 🍺
🇮🇪 Pearse Doherty, the Sinn Fein finance spokesman, was bashing the banks once again last week. The Irish Independent reported here on Tuesday 16th September that Doherty has said that the Government should call in the banks to demand that they stop withholding the benefit of lower rates from mortgage holders, labelling it a “scandalous cash grab”. This follows Doherty’s comments on DTAs the previous week. While Doherty appears to be on the side of consumers, the reality is that this argument is flawed in my view for a few reasons: i) the banks did not pass all the rate increases on the way up; ii) risk weights on Irish mortgages are materially above those in other European jurisdictions, meaning, ceteris paribus, pricing should be higher; and iii) well-documented collateral enforcement challenges (i.e., great difficulties securing repossession orders through the Courts system) in Ireland (meaning higher LGDs versus elsewhere - a point that is somewhat intertwined with the higher risk weights). Not to mention the fact that any such interventionist effort on the part of government would be very poorly received by institutional investors in my view. By neglecting to focus on the low deposit rates (unsurprising given it may be seen as a bid to help rich people), Doherty appears to be comfortable with the banks’ wafer-thin cost of funding, supporting the notion that this low cost funding should be levered as a cross-subsidisation tool. Investors will likely be quite relaxed on all of this I suspect as no government party or other power players has shown any desire to stimulate improved deposit rates / mix from a consumer perspective (households and businesses already have options at the end of the day) and lessons have been learned following a previous administration’s decision to haul the banks in to cut their mortgage rates back in 2015 shortly after the PTSB IPO.
Have a great week! 🍨
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