AIB before the Oireachtas Finance Committee

Brendan Burgess

Brendan Burgess

Founder
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I missed the opening statement

Michael McGrath

How many cases have received debt write down?

AIB: We have issued 1,100 split mortgages. Around 700 will have received debt writedown. It's not a policy, it's a reality.

On voluntary sales, around 60% will have received some form of debt write off.

McGrath: What are the criteria

AIB: Every case is different. Affordability and other debts
 
Ciarán Lynch

Is AIB able to provide more scope as it's state owned?

AIB: The bank has to be run at commercial arm's length. And we are regulated by the CB. But we do try to have innovative solutions.

LYnch : How do you deal with shortfalls

AIB: We do a deal beforehand to write it down over a period of time, typically shorter than an insolvency arrangement timeframe - say 5 to 6 years.

AIB: Staff with mortgages are treated no differently. That is our policy.

How many PIAs have been put in place?
AIB: None. We have voted on two where we were minor unsecured creditors. There are 15 in the process. We are in control of 4 of those, we will support three but veto the fourth, to whom we had offered a deal.

Lynch: Are unsecured debts a problem
AIB: Yes. Banks account for 2/3rds of the unsecured debts.

Lynch: Do the banks work together on this.
AIB: interbank we have no problems . we have a protocol for over a year.

Lynch: Well done on your innovative processes

Lynch: People in their 50s can pay interest but not capital. Have you made any progress with the CB on that.

AIB: 1) If a split mortgage is there, and someone has not paid off the warehouse by retirement, we have written in a right of tenancy on retirement.
 
Kieran O'Donnell

50% of your sustainable solutions are legal proceedings. Without them, you wouldn't have come within an ass's roar of the targets

AIB: statistically, you are correct.
Legal letters are our only option if they don't engage . We can't do anything else.
There are legacy issues - we were barred from taking legal action.

AIB ; 2,500 civil bills have been issued for PDHs. 200 for buy to lets, plus we have appointed 1,000 receivers. Instigated in the last 12 months.
O'Donnell: Do you expect them to be repossessed?
AIB: No. It will prompt many of them to engage.

KOD: Some say it's a disadvantage to be in positive equity

O'Donnell : Why appoint a receiver
AIB: If they don't pay the rent. WE give them an opportunity

O'donnell: How many of these receiverships are in positive equity?
AIB: WE don't know

O'Donnell: It seems that you are repossessing and appointing receivers on properties with positive equity.

AIB: The bank does not target positive equity loans, if that is what you are asking.

O'Donnell; How many of your split mortgages were in positive equity.
AIB; We do not offer a split or debt compromise to someone in positive equity.
O'Donnell: What solutions do you offer them?
AIB: Reduced payment; trade down; term extensions;
 
Pearse Doherty

ptsb were in before you and said that they do not charge interest on the warehouse, which was blatantly false. I have an offer from two weeks ago which shows interest at 4. % on the warehouse.

AIB: Correction: We do split mortgages for positive equity, but not debt compromise.

We do not do short term deals such as interest only anymore. When these deals expire, we offer them a long term restructure or we deem them unsustainable.

10,000 with no offers, 3,500 have not sent in an SFS.

We have a significant cohort of joint owners who have split up. They are very difficult to resolve.

Doherty: What is happening with IMHO. Are they just handing over the paperwork or are they doing real negotiating?

AIB: It's heartbreaking and relentless negotiating. WE have taken 70 cases out of the legal system as a result of their negotiations.

Doherty: What percentage of your proposals have been accepted?

AIB: Around 18%. We have had such a focus on achieving the targets for offers, we now have to get them across the line.

Doherty: AVS is not "voluntary" you have scared the bej....., the living daylights out of them. You are putting huge pressure on these people who are engaging. For voluntary, they must be engaging.

AIB: Some welcome it. They want to get rid of the house. In 50% of the cases of AVS, there is zero affordability.

Doherty: What type of percentage of debt is written off in a split mortgage
AIB: The cases which have got publicity are significant outliers. It's often none or minimal.

Doherty: You have a longer legal queue. Do people have to pay 25% of the arrears to get out of arrears.
AIB: The only way to come out is to go into another sustainable solution. Sometimes we know that they have money.

Doherty: How have you managed to do 300 mortgage to rents when no other bank seems to be able to do them?
AIB: We are trying to make the mortgage to rent
 
Kevin Humphries

Separated couples want to get one name off the mortgage, but can't. You won't allow it on affordability basis.

AIB: We can't issue a mortgage if it's not affordable. It's not in our gift.

Humphries: If a borrower has a €250k mortgage and a €50k unsecured loan with the same bank. How are you treating the €50k.

AIB: We will restructure both. If part of it is not sustainable, we will compromise it - i.e. we will write it off or forgive it.

Humphries: Do you have the same agreement with BoI?
AIB: Yes. We will come to an agreement with BoI if we are the unsecured creditor.

Humphries: Have you a code of practice where a receiver is appointed?
AIB: The Receiver has statutory duties. We comply with all the rules. Typically if they have paid a deposit, they get the deposit back if they want to terminate the tenancy.

Humphries: On the ground, it's different. The receiver is trying to push people out to get a higher rent. Someone on rent allowance is automatically forced out.
 
Aideen Hayden

Well done on IMHO. Would you fund a national service?

AIB: Yes. we believe that we need a national group like StepChange. The banks are talking about this. It would benefit us and the consumer.

Hayden: We come across many people with positive equity in arrears. Can you break down the solutions over positive equity and negative equity.

On joint mortgages - we have seen court orders directing that the mortgage be transferred into one person's name and the bank is ignoring the court's order. [ This seems incorrect. The court would not have the authority to do this? - BB]

AIb: We do not take people who rent out their home off trackers. There are 14 splits on buy to lets. they are former homes which were split first and then subsequently let.

We need to look at the whole CCMA and the legal structure around joint mortgages.
 
Richard Boyd Barrett: What are the obstacles to buy to rent

AIB -

Complex rules

The type of house - number of beds for size of family

Issues around the housing agencies - must comply with regulations about the type of house they can buy

There is a lot of people involved.

I met with Cluid. With 8 or 10 people sitting around the table, we should be able to iron them out.
 
Michael Creed

Your presentation jars with my experience on the ground.

For example, affordability.

it's like a game of poker - the debtor does not know what is wanted. No real effort is being made to find solutions.
 
Stephen Donnelly

Why are there so many repossession proceedings?

AIB:
The average period of non engagement before a legal letter is two years
The average period of non engagement before legal proceedings is three years.

AIB: We don't see a lot of repossessions - it will be in the hundreds. [ I wonder if I misunderstood this bit - it seems too low -BB]

Donnelly
You do offer split mortgages for those in positive equity but not write-downs.

AIB: That is correct. We will send you the data as there is no bias in our system

Donnelly: Debt for equity [again!]
AIB: When a person retires and owes us money, if they can afford repayment, they should do so.
We charge interest at the SVR on the warehouse.
We will roll it up if they can't afford it.

Brendan
 
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