EBS building society has announced the resignation of its chairman Mark Moran and finance director Alan Merriman after the lender posted an annual loss of €38.2 million for 2008.
The loss was incurred after the building society took a bad debt charge of €110 million, which included €69 million on the lender’s €512 million property development loan book. The write-off represented 13.5 per cent of the development loans and the building society anticipates further losses on these loans this year.
Mr Moran said he accepted the building society had made mistakes becoming involved in development finance and took “corrective action” last year by ceasing lending in this area.
He said that the resignations at the building society “demonstrate accountability to our members both at board and management level.”
“I am sorry that we are presenting to our members with such poor results today as a result of our impairment provisions but we are dealing with this in a very proactive and honest way,” said Mr Moran.
Mr Merriman told The Irish Times that he was “disappointed” and “saddened” to announce his resignation but added that the building society’s financial performance in 2008 was “very poor” and that there had to be “executive responsibility” within the organisation.
In addition to his role as finance director, Mr Merriman oversaw the building society’s move into development finance in 2004 and 2005 and managed the growth of this loan book through 2006 and 2007.
Mr Merriman will step down with immediate effect, while Mr Moran will stand down from his position at the building society’s annual meeting in May.
The building society becomes the fifth Government-guaranteed Irish lender to announce resignations in the past three months. Only Allied Irish Bank (AIB), the State’s largest bank, has not announced any resignations from either its board or executive management team.
EBS has about 70 customers in development finance with the largest exposure to a customer of less than €50 million. The society has taken the bad debt charge on this book assuming a 45 per cent drop from the purchase price paid by developers for the land securing the loans.
Before taking the bad debt charge, EBS posted total income of €172.3 million in 2008, down 11 per cent on the previous year.
The building society is planning to seek €300 million from the Government under the recapitalisation plan for the banking sector to add to its capital reserves.
