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AIB wrote off €2 billion in SME debt in the last year

“Debt compromise” has been rolled out to 1,500 small business debtors.

AIB's Bernard Byrne at the jobs committee today.
AIB's Bernard Byrne at the jobs committee today.
Image: Screenshot-oireachtas.ie

ALLIED IRISH BANK has written down over €2 billion worth of outstanding debt owed by Small and Medium Enterprises over the past 12 months.

AIB head of financial solutions Brendan O’Connor told the Oireachtas Committee on jobs, enterprise and innovation today that the bank has been rolling out a strategy which aims to determine the amount of sustainable debt a company can carry.

“In the last 12 months alone we have approved over €2 billion worth of compromise,” he told the cross-party group this afternoon.

Responding to questions from the committee as to whether the €2 billion equates to a write down, he replied: “That’s a write down, yes.”

He continued:

Practically speaking, our approach is no different to what it is on mortgages, where we have assessed that the debt cannot be repaid or can never be repaid, we are prepared to compromise on that debt.

€15 billion debt pile

AIB director of personal and business banking Bernard Byrne said that the bank had approximately 9,000 SME borrowers in difficulties with around €15 billion in debt attached to them.

O’Connor later said that around 25 per cent of this number has completed a debt restructuring process, with another 40 per cent now in the negotiation process.

He said: “I would hope that we would have the back broken on this before the end of 2014.”

He continued: “A debt compromise is a write down, yes…we’ve approved it for close to 1,500 or so of those.”

He said that agreements were subject to performance on the remaining part of the “sustainable debt”, but that customers would know that if they hit targets on the sustainable portion of the debt then a solution is available.

He said that the solution was born of the need to disentangle non-core debt that may be linked to a company.

“Most typically the borrowers in Ireland…borrow in their own name so you frequently have assets that are entangled…it is our core strategy to disentangle the non-core debt and to disentangle that over time.”

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Jack Horgan-Jones

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