Undated resignation letters required for loan approval
ISME condemns the practice
As reported in The Sunday Times, Sunday Independent and Sunday Business Post last weekend, ISME, the Irish Small and Medium Enterprises Association has called on our traditional banks to cease in the practice of asking company directors to sign undated letters of resignation as collateral for business loans.
In highlighting the issue, ISME has written to the finance minister, the Governor of the Central Bank, and the Office of the Director of Corporate Enforcement, expressing its concern about the practice and asking if such demands were consistent with directors’ duties under the Companies Acts.
Commenting on the issues, ISME, CEO Neil McDonnell said
“It is totally unacceptable that Bank of Ireland and AIB, both bailed out by the tax payer, are treating SMEs in such an offensive, extortionate manner. Provision of finance should be fair, transparent and equitable. If banks consider commercial borrowers to be so dubious that they require undated letters of resignation from them, perhaps they shouldn’t be lending to them at all.”
“We call on Bank of Ireland and AIB to cease this practice immediately, and to destroy any existing undated letters of resignation.”