The EBS, at its annual general meeting in Dublin yesterday, voiced its opposition to relaxing the mortgage lending criteria used by Irish financial institutions. It said increasing the supply of houses and enabling the State to compulsorily purchase land would be more useful ways to deal with the current housing crisis.

Its position contrasts with public statements from some other financial institutions which have called on the Central Bank to consider changes to the current income multiple guidelines for mortgage borrowers.

The second Bacon report also called for a review of the guidelines, in conjunction with an increase in the supply of houses.

The EBS chairman, Mr Henry O'Dwyer, said "loosening" the current lending guidelines would "only fuel house price inflation and would be of no benefit to those who are worst affected - people on lower incomes".

"It is not a real solution for lenders to give out very large loans to borrowers who cannot afford them," he added. However, he conceded that traditional multiples might be eased for a small number of people on higher incomes.

He said the Government had recently-aken two positive steps on the housing problem - action to improve public transport and new guidelines in relation to residential housing densities.

Moving to the future of the EBS, Mr O'Dywer said it was looking at new ways to fund its mortgage lending, including the setting up of a mortgage bond market in the Republic.

He said along with other members of the Irish Mortgage and Saving Association, the EBS was examining mortgage bond systems in Europe at present.

"This work is still underway, but early indications are that mortgage bonds, along the German or Danish model, have the potential to become a key source of funds for the Irish mortgage market in the future," he said. He added that reduced interest rates for borrowers should follow from such a move.

In response to a question from a shareholder, the chief executive, Mr Pat O'Reilly, said the society was seriously considering entering the pensions market. He said current pension products were "too complex, not transparent and not good value".

He said the EBS could supply pensions at low margins without the complexity associated with current products. The meeting was told the EBS is reviewing its non-core activities - like transaction banking such as direct debits and the foreign exchange service provided in some branches.

"Our service to customers has suffered in the past year, partly because of the huge growth in the volume of transaction banking," Mr O'Dwyer said. "It makes little economic sense to continue to provide an uneconomic service to those who do not have a real business relationship with the society," he added.

The society is considering a number of options in relation to its non-core business, the head of lending, Mr Martin Walsh, told reporters after the meeting. He said outsourcing or selling this part of its business to another company were just two options being looked at.

Mr O'Reilly made a strong defence of the society's mutual status during the meeting. He said the EBS could be the only mutual left in the Republic within a year.

He said those who got windfalls from demutualising building societies in the UK had often seen their gains "clawed back". He added that mortgage borrowers with demutualised building societies tended to pay more over the life of a loan.

Many shareholders called on the board to take action to improve the rate of return, with one man telling the directors that depositors were "giving money for nothing". Mr O'Reilly said some members might consider switching their money into investment products which EBS offered.