Sunday 22 October 2017

Security chaos at BoI as files left on public transport

'Catastrophic' breach of controls ahead of stress test

For Your Eyes Only: The 'market sensitive' documents
For Your Eyes Only: The 'market sensitive' documents
Sarah McCabe

Sarah McCabe

BANK of Ireland has launched a probe into its security systems after highly confidential documents regarding its mortgage book were found on public transport.

The documents, which include detailed statistics not otherwise available about mortgage arrears, loan applications, the performance of mortgages given to staff members and developers and its estimates of competitors' arrears problems running to March 2014, were discovered on public transport by a member of the public and handed into this newspaper.

The documents are classified as purple, the bank's highest level of classification. They are clearly identified as market sensitive.

Alongside detailed statistics dating back several years, they reveal the performance of the bank's mortgage book in the first three month of the year. The market only has access to data dating to December 2013 so this is a subject of intense interest to investors and analysts as the bank prepares for EU-led stress tests due later this year.

The Sunday Independent is restrained, for legal reasons, from disclosing specific details about what the documents say. However they paint a far more detailed picture of the bank's mortgage book than existing data provides.

Among other things, the figures indicate that both the total size of the bank's mortgage book and the amount of arrears continued to fall between January and March of 2014, in line with expectations based previous results.

They also reveal that "jumbo" mortgages (those with exposures exceeding €750,000) are far more entrenched in arrears than smaller mortgages, creating a major burden despite only making up a small percentage of mortgages.

The performance of the 11,063 (€1.23bn) mortgages held by bank staff is also detailed - with different trends evident in comparison to its general mortgage book.

The documents also reveal a difference in the legal tactics taken towards buy-to-let mortgages in arrears in comparison to owner occupied properties which have the protection of the Code of Conduct on Mortgage Arrears.

"To have someone lose information like this is pretty catastrophic," said one market insider. "Particularly since this is Bank of Ireland, a fully quoted institution, and not AIB or PTSB, which are 99 per cent owned by the Government. It's very surprising; they go through massive controls before releasing any information to the market so this is hugely careless.

"It could also raise issues with the Irish Stock Exchange in terms of the release of market sensitive information and regulatory compliance."

The lender has launched an investigation into how the documents were lost.

"We have a very strict system of protocols for safeguarding commercially sensitive information and they were clearly breached in this instance," said BoI head of communications Pat Farrell.

This is not the first time that BoI has been embarrassed by a serious security breach. It came under scrutiny in 2008 for waiting months to reveal that computers with personal details for around 32,000 customers had been stolen. They were being used by staff from the life assurance section and held medical backgrounds, bank accounts, names and addresses.

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