Most of AIB debt 'offers' revealed as legal threats
Published 04/09/2013 | 05:00
THE majority of "deals" offered to troubled homeowners by bailed-out AIB were actually legal letters threatening repossession, it has emerged.
AIB chief executive David Duffy came under fire from TDs and senators on the Oireachtas Finance Committee yesterday for saying his bank was ahead of targets for offering debt deals.
These targets, set by the Central Bank, were to offer a sustainable debt restructuring solution to 20pc of home owners in mortgage arrears by the end of June.
The AIB boss told the committee his bank was ahead of the target after making debt restructuring offers to 8,600 customers in the three months to the end of June.
But committee chairman Ciaran Lynch effectively rejected that claim, and Mr Duffy admitted 5,900 of the restructuring "offers" were legal letters threatening repossession. This is close to seven in 10 offers made by the bank to its customers during the period.
Mr Duffy, who appeared with other members of his senior team, said the letters were sent to those who have not made a payment in three years or more and refused to contact the bank to discuss their case.
He said in that situation the bank had "no choice" but to send the letters.
But Independent TD Stephen Donnelly said the letters should not have been included in the figures presented. He said he does not expect the Central Bank and Financial Regulator to accept that AIB has reached its target based on the numbers.
Stripping out the threatening letters, the bank fell well short of its target, Mr Donnelly said.
Around 30,000 AIB mortgage accounts are three months or more behind on repayments and the bank, along with other lenders, has been set a strict timetable to tackle the looming debt crisis.
AIB managers were before the committee in the first of four sessions where TDs will grill leading bankers on the matter. BoI's Richie Boucher and senior staff at Ulster Bank will be in Leinster House today, while Jeremy Masding of Permanent TSB is due to appear tomorrow.
Deputy Ciaran Lynch said the sessions have been called to see how all the banks are measuring up to the targets set to find sustainable, long-term solutions to the mortgage crisis.
AIB said that it has finalised 4,400 long-term agreements with mortgage customers who had been in arrears.
Of those, 2,579 involved capitalising arrears, in other words adding the missed payments to the total debt.