You can watch AIB at the Oireachtas Finance Committee now

Bernard Byrne - MD AIB

As soon as circumstances allowed we reduced the rates

we have 34% of the drawdowns

We have cut 4 rates in the last 24 months by 1%

Our SVR is the lowest

The lack of housing supply - AIB has a critical role in the supply chain - we provide a pipeline of hundreds of empty houses to the Housing Agency .

Brendan
 
Pearse Doherty

Asking about total remuneration...

What do you think of the changes to mortgage restrictions allowed yesterday?

Suspended due to a Social Welfare vote in the Dáil
Resumed with the Senators and Pearse Doherty and Michael McGrath present

Byrne: €220k was low relevant to the market.
We welcome the simplification
The LTI limit stays in place - affordability is key for us
It will solve the problem which people had in accumulating the deposit

Doherty:
How will it affect house prices?
I can get 5% tax back, 2% from EBS, so I only need 3%
We are nearly at 100% mortgages

Byrne:
House prices are too low to justify the building of new homes
So prices have to rise to increase the supply of first time houses
So, yes, in the short term, house prices will rise.
The measure will increase the development of first time buyers
We will look at developers and see that they have a market for their home.
Governor Lane will keep it under review

Doherty
13,325 homes still in arrears over 90 days
How many are hard core?
How many will there be no option other than repossession or voluntary surrender?
It's frustrating for us as legislators. We need to clear this up.

Byrne:
We share your concern. As we have progressed, we have tried to deal with the issues.
We have 38,000 restructures in place
We have written off €1.3billioin in mortgages.
Some have no affordability
Some have not engaged

Jim O'Keeffe (AIB)
The challenge for us is engagement. Some customers find it difficult. We work with the IMHO and StepChange. 3,000 have come through IMHO, 2,500 of whom have got solutions.

7,000 are in the legal process. But the legal process and repossessions are a tiny part of the solutions. 2015 48,000 restructures vs 700 repos (some of which were voluntary.)
25% of those over 90 days have re-engaged, and we have found solutions for them.

Doherty
It's the same spiel, engagement, engagement, engagement. You must do something different.
You have 569 houses. With ptsb you have over 1,000 vacant between you. That is criminal in the extreme.
Why have we not moved aggressively to make those houses available?

O'Keeffe
We are a part of the 200 houses being bought by the govt. The Housing AGency has a list of all the houses we own. We will make up a

Doherty
We pumped The 569 houses should be made available immediately to the

O'Keeffe
 
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Doherty
Will there be 3,000 trackers returned.
How many have lost their homes.

Byrne
First, the 3,000 figure came from the media. Not from us.
There are two cohorts
1)Those who had an expectation
2) Those for

2,600 are going on a new rate
- we are writing to them. We will be refunding them.

We are now engaging with them to give them the refund

We are comfortable with the provision we made.
We may have 14 customers who have lost their home as a result of the rate. That is our current estimate.

We wrote off €1.3 billion because we have right sized some mortgages.
The rate was not usually the issue why people had unsustainable mortgages

The 14. Would they have been entitled to a forbearance solution?
 
Michael McGrath
I acknowledge the progress you are making on mortgage rates and that you pay existing customers

But why did you not do that with EBS.

Byrne:
We have the same average rate as the rest of the Eurozone.

The cash back offer has a cost . We differentiated the offer for those who want a cash back offer.

The existing customers can switch from EBS to AIB (Very important)

McGrath
But existing EBS customers are paying higher than AIB


Byrne:
We can't differentiate between back book and

McGrath
The cash back is coming at a cost to the existing customers

What is the Blended cost of funds
Your answer in the questionnaire if

AIB: As of JUne 2016 1.28% if you are comparing it with last year's

McGrath: That is much higher than BoI and ptsb
AIB:
The CoCos may be impacting that. That is 13.85%
There will be
The others bring in zero cost current accounts, we don't.

McGrath
Fixed rates policy?

AIB
We pass on the benfit of cost of funding to our customers.
Over 60% take out a variable rate.

McGrath
Although AIB has a higher cost of funds, you have the lowest variable rates in the market
 
Michael McGrath
Clause 3.2 gave customers a choice of tracker
They are being offered 3.67%
That is an arbitrary rate which is higher than your variable rate
Please explaint he rationale.
Why is it not the 1%

Byrne
A prevailing tracker for someone who


McGrath
There is no prevailing rate - they don't exist

Byrne
Those who had rates will revert to them.

McGrath #
How many are in this group?

AIB
We have many different cohorts
of the 2,600 ,50% are AIB , 50% are ptsb
We have examined the marketing materials

McGrath
The customer had a choice
There is no prevailihng rate
they can argue that they are entitled to the rate

AIB
Trackers were withdrawn
WE didn't go a good job on understanding rates
When we withdrew the tracker, we made a mistate by not offering them.

McGrath
There is a prevailing rate on a large customer base
It's down to interpretation

AIB
It's based on the rate.
 
John McGuinness
In other countries, do the governments buy repossessed homes.

How many mortgage to rent have you done?

AIB
We have 190 at various stages, and we add 3 or 4 per month - we think it's a good solution

We would expect fewer than other banks,because we have more solutions on offer

The criteria in terms of income, location and type are restrictive

In terms of a wider scheme...
Keane proposed a mortgage to lease scheme. a portfolio of properties. We liked that idea.


We go to the Banking Payments Federation to make suggestions.

McGuinness
How many EBS cases go to court

JIm O'Keeffe
We had a higher volume in difficulty
The treatment is the same across the bank , irrespective of brand

McGuinness
I have come across cases where every avenue has not been exploited. I am surprised that they are in the court. Despite intermediaries' involvement, they end up in court. They have to apply for Free Legal Aid. It's very hard for them.

The process seems to close down to get them through the court.

A number of TDs have attended the courts, and what is happening is shocking.

Two brothers living together and he is in psychiatric care.His brother is the same.

AIB
We have an appeals process so do use it.
We engage with IMHO, MABS etc
We try to avoid the legal process - it's of no benefit to us
The majority of cases in legal are for people who have no engagement
The 2600 in the legal process were paying nothing (?) but 1600 are now paying as a result of the engagement.

McGuinness
How can they engage when it's in the legal process.

AIB
Over 24% of last years customers reengaged with us as a result of the legal process.
 
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