Banks cautious about insolvency Bill

IRELAND’S MAIN mortgage lenders have given some indication of how they plan to engage with the forthcoming personal insolvency legislation, following their attendance at a meeting of the Government’s Economic Management Council on Tuesday night.

The meeting was called in advance of the publication tomorrow of the Personal Insolvency Bill, which aims to address the mortgage arrears issue. While the Bill will legislate for voluntary write-down arrangements between mortgage-holders and banks, it is expected banks will be allowed to effectively veto agreements with individual borrowers.

Bank of Ireland said it had committed “significant resources to the management of mortgage arrears”, employing third-party international expertise to supplement these resources.

However, the bank stopped short of committing to any new measures, noting that “for a considerable portion of customers in difficulties, forbearance solutions implemented to date have been and will remain effective”.

Permanent TSB said the bank had begun an overhaul of its “collections” function in order to assist customers in difficulty, hiring a number of international experts in the field. It aims to double the number of people in this area to 220.

The bank has completed a detailed segmentation of its mortgage book to gain greater visibility over the arrears situation, it said. It is also looking at a number of initiatives including loan term extensions, reduced mortgage repayments, split mortgages, equity participation and negative equity mortgages.

In a statement, Ulster Bank said its forbearance arrangements were “tailored to reflect individual circumstances”. Speaking on RTÉ radio yesterday, the bank’s managing director of branch banking, Jim Ryan, said he could not say “with certainty” if the bank would be announcing anything new in relation to mortgage arrears in the next couple of weeks.

AIB and its subsidiary EBS said they supported the Government’s personal insolvency initiative and were “working to ensure full alignment with the requirements of the forthcoming legislation”.

As already set out in the Central Bank’s code of conduct on mortgage arrears, customers who are seeking debt resolution options will be obliged to completed a standard financial statement, as well as meeting an AIB staff member to enable the bank to determine “the most appropriate solution for each customer”.

It is also looking at measures such as split mortgages, negative equity mortgages and a voluntary sale-for-loss option, and has trained 300 specialist staff in these areas.

The bank noted it had already implemented solutions for more than 33,000 mortgage customers.

KBC Bank Ireland said it would be “piloting” medium term mortgage arrears resolution options – including long term loan extensions and a three-year interest-only mortgage solution – with a number of its customers who are experiencing difficulty.

Once this pilot process is completed, the bank will offer solutions to customers “based on their specific financial needs”.