AIB Dublin – Courtesy Google Streetview

In a scheme that included Kallakis forger Alexander Williams, “The Don” created a sham to fool the two banks into buying properties across the UK, properties and a plan which turned out to be smoke and mirrors and costed investors £60 million, when all was said and done. 

Britain’s biggest ever mortgage scam has a happy ending, sort of. The poker playing jet setter, who actually owned a private jet, helicopter and super-yacht, gets a few years in jail. Southwark Crown Court, Judge Andrew Goymer gave Kallakis seven, and Williams five years for orchestrating the massive cheat. The two went so far as to leverage their fake assurances to buy the Daily Telegraph in Central London.

What’s interesting, or shabby about the case is the fact the two were previously found guilty of selling English titles to unwitting Americans back in the 90′s. While the judged seemed to admonish the banks for ignoring the advice of their council in trusting the pair, the sentence for many seems exceedingly light. The rational for every-man in the UK being, in this economy most would trade 7 years for the millions still floating about beneath this scheme.

The Daily Mail report on the affair is the most extensive, revealing all the pictures and ins and outs of the shady dealings. In the UK, prison sentences for a set length, and over 12 months, allow the convicts to serve half the sentence behind bars, and the other half basically on parole. There is also time off for good behavior, and allowances for time spent being remanded during the trial. What has not be said in the whole affair is exactly how much time “The Don” will serve for perpetrating Britain’s biggest real estate fraud ever.

A final note, back in March of 2012 the Allied Irish Bank let go some 2500 employees, a bit of the penalty taxpayers pay for these crimes, perhaps?

The Scottish Property Federation reports scarecely more than £1.9 billion in transactions having occurred during all of 2011, that number down some 25.5 per cent on a 9.5 per cent drop in transactions overall compared to 2010. On a whole financial news from Scotland has been dismal of late. The Guardian reported on the North of England having been hit hardest overall in this recession, telling of rising unemployment and discontent with budget cuts. All Scotland is cast now into a scenario not unlike Greece, Ireland, Spain, and other EU countries.

Lending on real estate has been tumbling for more than two years now according to numbers from the Bank of England. And on the residential side of the real estate market in Scotland, things are not looking any brighter. Falling prices by the end of 2011 signal harder times for an overall real estate market stricken like all else in the North by the biggest economic downturn since the Great Depression, maybe ever.

To  make matters worse politically and banking wise, the Daily Record reports state owner Royal Bank of Scotland raking in over £530million pre-tax profits for 2011. With all of Scotland still reeling to dig out of a money disaster, RBS is being raked over the coals for sacking 21,000 employees then forking over huge bonuses to their top decision makers. RBS is not stranger to upheaval and ill fated decisions, the bank reported the largest ever single loss for any UK bank of £24billion after the takeover of Dutch bank ABN Amro.

Taken on the whole, the news of Scotland’s continued woes has to weigh heavily on the UK and the world in general. RBS boss Stephen Hester’s huge bonuses, Swiss ski chalets, public outcry, RBS and the entire Scotland banking sector would seem suspect for many. In 2010 Hester alone took home in excess of £6.5m in bonuses and pension payments. The UK Government owns upwards of 80% of RBS.

We will update this news as the story develops. We leave you with Hester reporting on 2011 results for RBS.

The UK's property markets could be heading towards trouble. © Vladimir Wrangel - Fotolia.com

The UK Commercial Property Lending Market Survey warned that UK banks’ ability to manage their commercial loans could be destabilized as a result of the worsening Eurozone crisis, something that could lead to the collapse of the country’s entire property market if no action is taken.

The survey, which was carried out by the De Montfort University, highlighted just how fragile UK markets were – it said that one quarter of all loans on commercial property in the UK, worth £28.5 billion, were now valued higher than the assets they are backing. Researchers also claimed that between £85 billion and £114 billion of loans on UK commercial properties “could not be refinanced on the current market terms”.

Banks have been actively pursuing a policy of “measured” debt reduction since 2009, something which has prevented the fire sale of numerous assets and the overall collapse of the market, said De Montfort.

However, the uncertainty resulting from the ongoing Eurozone crisis, combined with a lack of economic growth in the UK has exacerbated problems concerning a lack of liquidity and the rising costs of capital.

The findings have led to the British Property Federation (BPF) calling on the government to relax its rules so that new lenders would be able to enter the market and prop things up.

According to Liz Pearce of the BPF, the results of the study confirm how urgent it is that the UK government does everything it can to tackle the country’s property debt, something that would entail using all the tools at its disposal in order to do so. Pearce said that the government urgently needed to encourage new buyers to enter the market – which could be achieved by reforming UK real estate investment trusts so that mortgage REITS can be created.

Furthermore, added Pearce, the government needs to do more to encourage new investment and kick start economic growth in the UK. She told Bloomberg that one idea would be to refrain from charging full business rates on commercial properties which are lying empty, as this is a significant disincentive for landlords.