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Bank of Ireland: 120 homes repossessed or surrendered in first half of 2012

Meanwhile, it emerged that 16,000 BOI customers have had their mortgage restructured, with 86 per cent of people fully complying with payment.

Richie Boucher, Bank of Ireland Group Chief Executive
Richie Boucher, Bank of Ireland Group Chief Executive
Image: Laura Hutton/Photocall Ireland

CHIEF EXECUTIVE OF Bank of Ireland, Richie Boucher, said the bank has seen 120 homes repossessed or surrendered in the first half of this year.

Boucher made the comment as he and two other executives of the Bank of Ireland (BOI) appeared before the Oireachtas committee on Finance, Public Expenditure and Reform today.

Boucher also said that he believes house prices are stabilising in Ireland. He said this is based on the trajectory of what the bank anticipates and if the economic environment in Ireland and the UK continues at its current pace. He said that the market “appears to be stabilising at current levels”, mainly in urban areas.

Yesterday, AIB told the committee that it would be back in profit in 2014, a timescale which Boucher said would also apply to Bank of Ireland, adding that he was not permitted to give a profit forecast.

Mortgages

It emerged at the committee that 16,000 BOI customers had their mortgage restructured, with 86 per cent fully meeting the revised arrangements. BOI has carried out 120 repossessions for the first half of this year, mixed between owner occupiers and buy to let customers.

The Mortgage to Rent scheme was announced around a year ago. BOI has approved funding for 10 cases which are going through various stages of applying for the scheme while there are another 3-4 other cases going through pre-screening. This was described as “pathetic” by Sinn Féin Deputy Pearse Doherty.

Boucher said the bank would like to go through this process more quickly. Committee chair Deputy Ciarán Lynch said that a recent parliamentary question said that only one home has made it completely over the line, and that in this case it was through a sub prime lender. “Maybe the sub-prime lending market is more realistic about what the cost of houses are than banks,” suggested Lynch, adding that BOI may be having difficulty with agreeing prices.

This idea was rejected by Boucher, who said he did not think it was the case.

Arrears

With regard to mortgage arrears, there is a negative equity of €4.3 billion, which Deputy Boyd Barrett asked if BOI would consider writing off.

“The value of negative equity is not naturally a correlation to cashflow,” Boucher replied.

Boucher said that with regard to mortgage arrears, the pace appears to be abating when the trajectory is on a quarter by quarter basis. Deputy Boyd Barrett said that the arrears figure rose from 5.89 per cent in 2011 to 9.22 per cent this year. “That doesn’t sound like an abating pace to me,” he said.

Deputy Kevin Humphreys presented a letter which he said BOI had sent to tracker mortgage customers about a Red C poll on interest rates.  Liam McLoughlin, Chief Executive, Retail Ireland, said there was no intention to ‘trick’ customers, as was suggested by Humphreys, and the letter was sent to 300 customers. Boucher said that the bank is trying to ascertain demand for fixed rate products.

Deputy Stephen Donnelly said: “I don’t know what you’re doing here if you’re refusing to answer any questions” when Boucher could not state whether the bank will consider debt surrender as part of the upcoming insolvency legislation.

Boucher said that Bank of Ireland agreed with the Government that it will provide €3.5 billion of new lending to the SME sector. Boucher said that at least 97 per cent of this lending was to new or existing customers.

Salary

Boucher was questioned on his salary, which is in excess of €600,000 a year, above the cap set by the State on bankers’ annual pay.

(sinnfeinireland/YouTube)

He said that his remuneration is put to the shareholders of the bank who approved the amount. He added that he had a salary reduction in 2009 and a reduction in pension after that.

Deputy Kieran O’Donnell said that some of the taxpayers money is going to fund a deficit on a pension scheme paying around €650,000 to Brian Goggin, who was CEO of Bank of Ireland.

State investment

The State has invested €4.8 billion in cash up to the end of June 2012 in BOI and has a 15 per cent shareholding. Boucher said the bank has reduced liabilities under the Eligible Liabilities Guarantee (ELG), and that when it expires on 31 December, Bank of Ireland is “prepared and ready” for that.

Read: IBRC and AIB executives to face Oireachtas committee>

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