Firm does right thing -- if only the banks would too
Published 23/10/2012 | 05:00
THE troubles that have engulfed the Aviva Irish Property Fund could be taken as a metaphor for the country -- when the downturn hit, many assumed it would be brief.
Property values have kept falling, and five years later they are between 50 and 65pc below peak.
Having decided prices would pick up, fund managers borrowed to pay off those who wanted out.
Policy holders were fleeing and the overdraft set up to fund the withdrawals ballooned to €30m.
Now there were interest and capital payments along with plunging property values.
Too many households made the same error.
The legacy is 170,000 residential mortgage holders in trouble, and 50,000 buy-to-let investors struggling to meet repayments.
But at least now with plans to pay out total compensation of €25m to some 80,000 policy holders in the fund, there is evidence that at least Aviva is facing up to its responsibilities.
If only the banks would now do something about their part in the mess.