Allied Irish Banks has written-off mortgage debts in a small number of cases where it has repossessed houses but is working on industry-wide long-term solutions to lessen the debt burden for struggling borrowers to help them stay in their homes.
Speaking to the Oireachtas Joint Committee on Finance, Public Expenditure and Reform, AIB executive chairman David Hodgkinson said he was consulting with the Department of Finance and the Central Bank on a wide range of solutions to assist distressed customers.
Mr Hodgkinson said the bank was not looking to introduce tailored solutions for just a small number of customers but a massive programme across the bank to offer customers different options to help them.
"We are trying to keep people in their homes," he said.
He said AIB had repossessed less than 20 houses, all but one of which were voluntarily handed over, and that agreement had been reached with more than 5,000 customers to help them with their debts. Most cases involved customers moving to paying only interest on their mortgages.
The head of AIB's home mortgage business, Jim O'Keeffe, said that the bank had only written off mortgage debt in a "small number of cases" or "handful" of cases and only where houses had been repossessed.
AIB would have to increase its standard variable rate on mortgages, Mr Hodgkinson signalled, but added that AIB's rate would be competitive and remain below the average rate in the market.
The head of AIB's home mortgage business, Jim O'Keeffe, said that the bank had only written off mortgage debt in a "small number of cases" or "handful" of cases and only where houses had been repossessed.
He said the bank had repossessed 17 homes and 21 buy-to-let properties.
Mr Hodgkinson said the bank was working with the department and the Central Bank to find out the cases where it would be appropriate to write off a borrower's debts. A Government-appointed expert group is assessing possible solutions for mortgage borrowers in distress.
"It is a work-in-progress with the department," said Mr Hodgkinson, who added AIB did not want to "go it alone" on wider solutions for mortgage borrowers who cannot repay their debts without the support of the bank's owner, the Department of Finance, and the Central Bank.
On the appointment of the bank's new chief executive, Mr Hodgkinson said the bank may need to pay above the Government's €500,000 pay cap - up to €690,000 a year - to fill the role.
The Government's committee on bankers' pay, the Covered Institutions Remuneration Oversight Committee (Ciroc), recommended that the chief executive of AIB be paid no more than €690,000 a year. "I am confident that we will get a CEO for AIB within the Ciroc-recommended salary range," he said.
Mr Hodgkinson said he has recommended this sum should be paid to the new candidate and it was up to the Minister for Finance Michael Noonan to sign off on a salary above the Government pay cap but the Minister had not yet approved this.
The board of AIB has interviewed all of the candidates on the bank's shortlist reduced from 250 potential candidates identified by the bank, he said.
The Central Bank had held initial meetings with the candidates on the AIB's shortlist for chief executive but had not yet carried out its fitness and probity tests on the suitability of the candidates, he said.
Mr Hodgkinson said he would be willing to stay on for another year as non-executive chairman of the bank to allow for a smooth handover to the new chief executive. He had initially intended to act as chairman of the bank for a year after being appointed in October 2010.
Bernard Byrne, director of personal and business banking at AIB, said that about eight of the top 55 senior managers at the bank prior to the 2008 financial crisis were still working with the bank. Mr Hodgkinson said that they were working in "non-core" parts of the business and not in leadership roles.
The board of the bank has been cleared out of pre-crisis directors and that the earliest appointee had been on the board since 2009 after the bank guarantee and that the executive management were all new appointees, he said.
Mr Hodgkinson said that he hoped that AIB, which is 99.8 per cent owned by the State, would be able to attract an investor to take a minority shareholding in the bank once it had fully provided for its bad debts this year.
Investors ranging from private equity firms and the "real vulture operators" to investors with cash were interested in taking a stake in AIB, he said, and he hoped to engage further with possible investors next year. Investors were prepared to make a 10-year commitment, he said.
Mr Hodgkinson said that his preference was for the bank to sell a minority shareholding as AIB would not want to give away a stake in the bank at an early stage when he believes that there is considerable potential value in AIB as the economy recovers.
Staff numbers had fallen to 13,800 from about 25,000 at peak in 2008, which included 10,000 staff at AIB's Polish bank that was sold last year. The bank expects the workforce to decline by a further 2,000.
Mr Hodgkinson said he hoped that AIB, which is 99.8 per cent owned by the State, would be able to attract an investor to take a minority shareholding in the bank once it had fully provided for its bad debts this year.
Investors ranging from private equity firms and the "real vulture operators" to investors with cash were interested in taking a stake in AIB, he said, and he hoped to engage further with possible investors next year. Investors were prepared to make a 10-year commitment, he said.
Mr Hodgkinson said that his preference was for the bank to sell a minority shareholding as AIB would not want to give away a stake in the bank at an early stage when he believes that there is considerable potential value in AIB as the economy recovers.
Staff numbers had fallen to 13,800 from about 25,000 at peak in 2008, which included 10,000 staff at AIB's Polish bank that was sold last year. The bank expects the workforce to decline by a further 2,000.
