Bank of Ireland chief defends hard line on debt forgiveness

Bank of Ireland chief executive Richie Boucher has defended the company's tough stance on debt forgiveness.

Mr Boucher, in an interview with The Irish Times, also questioned recent write-offs being offered by rival AIB to mortgage arrears customers via a pilot scheme operated with the Irish Mortgage Holders Association (IMHO).

“We have been consistent [on debt forgiveness]. I am sure, and I know, that’s not to everyone’s taste but then again how does debt forgiveness arrive in AIB? he asked. “Is there transparency? Is it some type of a lottery where names are pulled out of a hat every morning? I don’t know.”

'Blunt' approach criticised
When asked why Bank of Ireland has not established a similar partnership with the IMHO, Mr Boucher replied: "We think the collection of mortgage arrears should be a core competency in a bank that employs over 11,000 people." Bank of Ireland was criticised last week by Lorcan O'Connor, the head of the Insolvency Service of Ireland, for its "blunt" approach with distressed borrowers.

Mr Boucher responded: “Every concession means someone [else] has to pay . . . We have responsibilities to the people who are meeting their mortgages, to depositors [and] to the people who have given us capital.”

Bank of Ireland also expects that arrears customers who hand back the keys of their property, or agree to a voluntary sale, should repay the residual debt on their loan.

“It depends on the person’s means . . . We do expect to come to some arrangement as to how the residual debt will be paid,” he said.

Bank of Ireland is 14 per cent State owned and received €4.8 billion in bailout funds after the crash in late 2008.

When asked about his €843,000 salary, Mr Boucher replied: “There will be some people . . . who if I got paid sixpence would say it’s too much.”

Mr Boucher is confident the bank will pass capital stress tests that will be undertaken on European banks this year.

Cautiously optimistic
"We believe we're adequately capitalised and appropriately capitalised for our business strategy but one can never be complacent," he said.

His remarks came as soon-to-depart secretary general of the Department of Finance John Moran said the tests were unlikely to create a "big shock" for Ireland.

He also said that AIB, which has received a €20.8 billion State bailout, could raise private capital now if required. “I think AIB could raise capital . . . it’s a question of price.”