Cold water poured on idea of 'debt forgiveness'
Published 15/04/2011 | 05:00
BANK of Ireland boss Richie Boucher yesterday said it would "not be fair to assume" that his bank's approach to dealing with embattled customers extended to debt forgiveness.
The banker also poured cold water on suggestions that Nama could soon be co-funding its loans, saying there had been "no contact" from the toxic loans agency.
The comments come after AIB said earlier this week that it was "actively considering" using some of its latest €13.3bn bailout to write-off portions of debt for under-pressure homeowners.
On the same day, Nama offered hope to would-be homeowners by saying it would be prepared to use some of the agency's €1bn to help finance lending.
Asked whether his institution was contemplating similar debt forgiveness moves to AIB's, Mr Boucher said BoI already had a "debt modification" strategy in place.
"We work on an individual basis with the customer, we have people who are trained and skilled at assessing customers needs," he said.
Mr Boucher added that it would "not be fair to assume" the scheme, which has been used in about 9,500 residential mortgage cases, can extend to debt forgiveness.
The comments came as BoI revealed that it has €407m of impairments on its residential mortgage portfolio, as property price expectations fell and customers slipped into arrears.
At the end of December, some 4.2pc of BoI's Irish mortgage book was in arrears for more than three months, though the figure rises to 5.9pc for buy-to-lets.
"The trajectory of arrears is stabilising, it's still going up but it's stabilising," said Mr Boucher. Another "spike" in arrears is not expected, he added.
Meanwhile, BoI finance boss John O'Donovan hinted that the bank would soon move to reduce the "red-hot" interest rate it pays customers who have cash on deposit.
"It's going to be impossible going forward to maintain deposit pricing in the Irish market," he said.
Dramatic changes to BoI's branch network are unlikely. "We see the branch network as a real strength," Mr Boucher said. "Over a five-year period our footprint will change but I don't think it will change dramatically."