Bank of Ireland has attempted to defend its dealings with distressed mortgage holders saying it cannot do special deals as it has to remain profitable.
Speaking at the Joint Oireachtas Committee on Finance, Public Expenditure and Reform, Bank of Ireland chief executive Richie Boucher said the institution was offering deals to customers that it was confident would help to keep them in their homes.
Mr Boucher said debt forgiveness was “not a policy of the bank” as it had responsibilities to a wide range of stakeholders - including the Irish State and taxpayer, which has been repaid some €3.9 billion of the €4.8 billion invested in Bank of Ireland.
He said that if the bank is not profitable, it cannot lend money into the economy and repay the State which could well mean that citizens would face higher taxes or diminished services.
Asked about forbearance by committee chairman Ciarán Lynch , Mr Boucher said any loss arising from a deal a with customer was “a cost to the bank”.
“Unless there are exceptional circumstances, we don’t believe that a restructure is possible unless the customer can meet the full interest on the mortgage.”
The bank was criticised during the hearing, which set out to Central Bank targets for sustainable solutions to mortgage distress, for failing to provide detailed figures and over the nature of its split-mortgage offering, which does not freeze interest charges on the warehoused element.
Independent TD Stephen Donnelly told Mr Boucher that almost all of the bank’s restructuring deals resulted in mortgage holders paying back a higher amount of capital.
Mr Boucher said that restructuring mortgages and loans cost the bank money and that these additional costs had to be met.
Mr Donnelly said 90 per cent at least of these restructuring deals increased the indebtedness of households, and that banks were profiting from mistakes people made in the past but also their own mistakes in lending money.
More broadly, Mr Boucher said the number of Bank of Ireland customers in early arrears fell in “June, July and August”.
He told the committee that 11,774 mortgages were in default at the end of March and that by the end of June some 3,103 of those were in a legal or resolution process and 3,164 had been restructured or cured.
At 53 per cent of cases, this was far above the Central Bank’s target of finding a sustainable solution in 20 per cent of cases.
“Our arrears reflect economic and affordability issues. We continue to monitor our portfolios and we do not believe negative equity is a driver of default. it is primarily where customers have income issues,” he said.
On the subject of Priory Hall, Mr Boucher said up to eight former residents of the apartment complex had owner occupier mortgages with the bank.
The majority of these had nominated a third party to engage with the bank, he said, and discussions were ongoing.
He said he could not give any specific commitment with regard to Priory Hall, which has been vacated for some time as a result of safety concerns, but that he would be keeping an eye on how other banks approached mortgage holders.
