Friday 18 October 2019

Bank chief's €2.8m mortgage costs him just €1,400 a month

Patrick Kennedy
Patrick Kennedy
Ronald Quinlan

Ronald Quinlan

A €2.8m mortgage owed to the Bank of Ireland by its incoming chairman Patrick Kennedy has been costing him as little as €17,000 a year to service.

An examination by the Irish Independent of the accounts for the Bank of Ireland Mortgage Bank for the years 2013 to 2017 shows that Mr Kennedy, best known for his former role as CEO of Paddy Power, owed a total of €2,823,000 throughout the period, with no reduction in the principal recorded.

Bank of Ireland chairman Patrick Kennedy. Photo: Gary O' Neill
Bank of Ireland chairman Patrick Kennedy. Photo: Gary O' Neill

Notes to the bank's financial statements for each of these years show how Mr Kennedy's mortgage principal remained constant through the payment of varying amounts of interest.

The BoI Mortgage Bank's latest annual report shows Mr Kennedy made payments totalling €17,000 - the equivalent of €1,416 a month in both 2017 and 2016.

In 2015, his payments were slightly higher at €18,000 - the equivalent of €1,500 a month - while in 2014, they came to a total of €22,000, or the equivalent of €1,833 a month.

While the terms of Mr Kennedy's mortgage remain unclear, the notes to the bank's financial statements stated that: "All loans to directors are made in the ordinary course of business on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than the normal risk of collectability or present other unfavourable features."

In an effort to put Mr Kennedy's repayment figures in some perspective, the Irish Independent used the Bank of Ireland's online mortgage calculator to establish the monthly repayments on a mortgage of €2,823,000 over a term of 30 years at the quoted 3pc interest rate. Using these variables, the repayments for our theoretical borrower came to €12,208.55 a month.

But while the payments made by Mr Kennedy between January 2014 and the end of December 2016 would appear to be quite low, it is important to note that the overall amount owed by him on his mortgage was greatly reduced in 2013. An examination of the accounts for that year show Mr Kennedy made payments totalling €1,135,000, to bring his mortgage down from €3,958,000 to the €2,823,000 owed at the end of 2017.

The bank's annual report for 2013 shows that Mr Kennedy made payments of €253,000 in 2012, reducing the amount owed on his mortgage from €4,211,000 to €3,958,000.

Asked for comment on Mr Kennedy's mortgage with the Bank of Ireland, a spokesman for the bank said: "We are unable to comment on individual accounts." Mr Kennedy, who takes up the position of Bank of Ireland chairman this July, declined to comment.

The Bank of Ireland Mortgage Bank's 2017 accounts also show that Bank of Ireland's newly appointed CEO Francesca McDonagh had a mortgage facility for €985,000 approved during 2017. The notes to the financial statements add that Ms McDonagh did not draw down the loan.

Ms McDonagh's predecessor as CEO, Richie Boucher, meanwhile cleared the remainder of his mortgage with Bank of Ireland with repayments totalling €16,000 in 2017, the accounts show.

Bank of Ireland has announced the appointment of Evelyn Bourke as a non-executive director to its board.

Ms Bourke's appointment, which takes effect from tomorrow, will also see her join the bank's audit committee and the nomination and governance committees. Ms Bourke was appointed CEO of Bupa Group in July 2016, having served as acting group CEO from April 2016. She is also a member of the Bupa board.

Irish Independent

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