Monday 9 December 2019

Banks' 11th hour hopes to soften Priory Hall deal

Lobby group's desire to 'mitigate risk' for banks

TOM McFEELY: The disgraced developer behind Priory Hall. Photo: David Conachy
TOM McFEELY: The disgraced developer behind Priory Hall. Photo: David Conachy

Sarah McCabe

The country's biggest domestic banks and foreign lenders were called to a last-minute meeting with the powerful Irish Bankers Federation amid fears about the possible repercussions of a solution to the Priory Hall scandal. The meeting took place days before the Government's solution to the housing debacle was revealed.

When one proposal emerged early last October which "would likely mitigate the risk of precedent for banks", days before the Priory Hall Resolution Framework was issued, top executives from AIB, BoI, Ulster Bank, Permanent TSB, KBC, Lloyds and loan-servicing group 
Certus were all called to a meeting at industry body the Irish Banking Federation prior to its making representations to the Department of Finance.

Ulster Bank head of corporate affairs Sarah Dempsey, Permanent TSB asset management head Shane O'Sullivan, KBC's Hugo Doherty, Bank of Ireland's Lorcan Brophy, AIB's Brendan O'Connor and Gareth Boylan and Laura Fitzgerald of Certus were all called to the meeting to discuss the proposal, moments before the IBF met with the Department of Finance.

This and other revelations are contained in hundreds of pages of correspondence between the IBF and the Department of Finance's financial services and banking division that took place between 2011 and 2013, obtained by the Sunday 

The documents show a very close relationship between government departments and the banking group on the issue of credit and debt policy.

Senior people from both were in regular contact over a number of high-profile issues before they came to public attention including the recently introduced personal insolvency regime.

But heavily redacted email conversations on the issue of Priory Hall, in September and October of last year, are particularly notable.

Built by developer Tom McFeely in 2007, the 187-unit complex has remained empty since being closed by council fire officers in October 2011 over safety concerns. Who would be liable for the unfit buildings - which most owners had taken out mortgages to buy - was for a long time unclear.

Maurice Crowley, head of retail banking at the IBF, was given advance copies of government frameworks and press statements on the matter before they were released to the public.

Mr Crowley requested changes to some documents, before they were issued to the media and other parties.

Ultimately the Priory Hall Resolution Framework, which is overseen by Dr Martin McAleese, imposed some liability for lenders.

The framework, accepted by residents days after the IBF's hurriedly-called meeting, put the burden of redevelopment of Priory Hall on Dublin City Council - but included an extensive amount of debt write-off for lenders.

As part of the framework, the banks agreed to sell any owner-occupied apartments and the 65 owned by developer Tom McFeely for a fixed, low price to Dublin City Council.

The owner-occupiers themselves had their mortgages written off with their lenders obliged to grant them new mortgages, up to and including 100pc mortgages.

Meanwhile mortgage holders who had borrowed to buy investment apartments rather than primary homes (buy-to-lets), were granted moratoriums on their mortgage payments until the apartments are redeveloped by the council.

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