Belfast Telegraph

Bank chaos thwarts Northern Ireland property firm's plans

Bosses at a Northern Ireland property company have voiced frustration with the Irish banking system.

In its latest annual report, PBN Holdings said that most of its projects have been "mothballed" due to the current slump in the property market and the failure of banks to lend.

The firm - its subsidiary and associate companies - borrowed from Anglo, First Trust, Progressive, Ulster Bank, Bank of Ireland, Bank of Scotland (Ireland), Northern Bank and Standard Life.

PBN was told earlier this year that its assets may be taken over by NAMA, and was informed on October 25 that Bank of Ireland loan exposures had been acquired by the 'bad bank'.

Loans from Anglo Irish Bank and Allied Irish Bank are currently on a NAMA disposal schedule. Neil Adair, one of the directors of PBN, was Anglo Irish Bank's Belfast-based regional director, while another director, Paddy Kearney, has been linked to the so-called 'golden circle' - 10 businessmen who bought 10% of Anglo Irish Bank with the bank's own cash.

Anglo Irish Bank loans are now being wound down as part of the Republic's €85bn (£72.1bn) bailout.

Anglo is likely to be split into two banks, with the heavily indebted 'bad' part wound down or eventually sold.

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"Despite clear unavailability of capital within the Irish banking system, the Irish financial regulator assured as late as November 2008 that Irish banks were some of the best capitalised banks in Europe ... this has certainly been contrary to what PBN Holdings and its subsidiary and associated companies have experienced as customers," the report claims.

"Given the foregoing comments during the latter part of 2008 and early part of 2009, it became increasingly clear that the Irish banks on whom the group are almost totally reliant on for funding clearly did not have the capital base and long-term liquidity to be able to provide development finance to enable the group to take forward even the most profitable development schemes.

"Some of the banks have been in such disarray that they have not been available to discuss future business plans.

"Each of the group's banks have advised that they do not have funds available to undertake the groups development projects and as such all of the group's developments have been mothballed until the situation improves.

"The non-availability of bank development funding and mortgage finance has resulted in the group relying totally on its own cash reserves and the intensive asset management of its own commercial property portfolio, to fund the ongoing working capital and costs of finance, without being able to trade through the stock of property assets to convert them into cash."

Earlier this year PBN Property sued clients over alleged failure to fulfil contracts to buy apartments in south Belfast. As well as being paid for the loss of value, the firm retained ownership of the Woodland Manor flats as part of an out-of-court settlement.

PBN Property projects include the Savoy Centre in Glasgow, Parkway Shopping Centre in Middlesbrough and The Shore in Carrickfergus.