Wednesday 18 July 2018

AIB boss complains about difficulty repossessing homes when mortgage holders get into arrears

Bernard Byrne
Bernard Byrne

Charlie Weston Personal Finance Editor

The boss of AIB has complained about the difficulty repossessing homes when mortgage holders get into arrears.

Bernard Byrne also said the move by regulators to force banks to maintain “conservative” capital levels will mean higher costs for customers.

Mr Byrne is due to address the Oireachtas Finance Committee, chaired by TD John McGuinness, tomorrow.

He is set to tell the politicians that the demands of regulators that banks hold lots of capital carry cost implications for the bank.

“It is also legally and culturally difficult for a bank in Ireland to realise its security over loans – a fact that leaves investors wary and regulators concerned about the capital required to support such activities.”

The comments come days after the AIB Group was forced to admit another 500 tracker denial cases at its subsidiary EBS.

The group has close to 12,000 tracker-denial cases.

AIB is one of several Irish banks caught up a mortgage overcharging controversy which has seen banks identify about 37,000 accounts which had the wrong interest rate applied to their loans, or were not offered tracker mortgages, closely tied to the European Central Bank’s key rate, when entitled to them.

The bank is working on a “final group of outstanding cases” and expects to have paid compensation to those customers by the end of September, Mr Byrne will say.

The Government spent almost €21bn bailing out AIB during the financial crisis.

It sold about third of its holding in the bank last year and retains 71pc of the lender.

The current value of AIB “positions the government to recoup its investment,” Mr Byrne will say.

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