Financial insolvencies 'could rise again'

Insolvencies in the financial sector declined last year but could be set to rise again in the opening months of 2010.

This is according to new research from Deloitte, which revealed a nine per cent drop compared to data from 2008, with 59 finance firms entering administration over the 12-month period.

In the final quarter of the year there were just eight such instances, half the number that took place in the three months to the end of October.

Reorganisation services partner for Deloitte Lee Manning explained that increased versatility from lenders ’enabled many businesses to weather the economic storm’, but warned that administration may soon be set to rise again.

’We would not expect the rate at which administrations have declined in the past two quarters to continue,’ he remarked, adding that a ’modest increase’ is likely in the first quarter of 2010.

Last week, the Organisation for Economic Co-operation and Development recommended that financial institutions introduce risk management and corporate governance safeguards in order to reduce the risk of failure. ADNFCR-2318-ID-19563786-ADNFCR