BoI amends terms on up to 500 mortgages each week

Bank of Ireland is offering mortgage restructuring options to 400-500 customers per week, an Oireachtas committee was told yesterday by one of the bank’s public interest directors.

Former minister Joe Walsh, who was appointed to the board of the bailed-out bank in 2009, said 700 staff were now involved in the management of mortgage arrears and distressed debt.

He said the bank had restructured 16,000 mortgages, and over 86 per cent of those customers were meeting their contracted payments.

AIB public interest director Michael Somers said bank officials needed to be careful “that they’re not being hoodwinked” when it came to writing down debt. He said 2,000 staff at the bank were now employed in supporting customers experiencing difficulties with their loans.

“We will not be throwing people out on the streets, some deal will have to be cut and if that involves the writing down of debt then so be it.”

Minister for Justice Alan Shatter last night welcomed a clarification by Permanent TSB accepting the principle that some customer debt would have to be written off.

In a statement released yesterday the bank denied it had ruled out debt forgiveness and insisted it was committed to applying the terms of the Personal Insolvency Act.

The statement came 24 hours after one of its public interest directors, Ray MacSharry, ruled out any blanket debt forgiveness for its customers when he appeared before the same Oireachtas committee.

The former EU commissioner and finance minister made the comments on the same day as the Personal Insolvency Bill – which is designed to facilitate debt write-down – completed its passage through the Oireachtas.

‘Seriously out of touch’

His position prompted a strong reaction from Mr Shatter, who said Mr MacSharry should seriously consider the comments, which he said were “seriously out of touch”.

The bank directors appeared before the Oireachtas finance committee, chaired by Labour TD Ciaran Lynch, which is examining the role played by the public interest directors in State-backed banks.

Mr Shatter, welcoming Permanent TSB’s commitment to work the personal insolvency legislation, said: “The bank is, of course, correct in saying that the financial circumstances of each person who seeks to enter into a Personal Insolvency Arrangement will have to be individually considered.”

He said it was crucial that every financial institution constructively engaged in the debt resolution processes that will be available under the Act.

A spokesman for Permanent TSB said it would not “throw away scarce capital to customers in arrears regardless of their actual circumstances” but would focus on working with them “to find sustainable solutions”.

Bank of Ireland and AIB public interest directors admitted they have had no formal contacts with either the Minister for Finance, the Department of Finance or the Central Bank since taking up their posts in 2009 and 2010.

Michael Somers, who joined AIB’s board in 2010, said he was “taken aback” at the risk assessment culture inside the bank. He said only loans above €750 million went to the board for approval at the height of the boom, so lax were the risk protocols.