AIB to restructure 2,000 mortgages a month, says chief
Allied Irish Banks will ease the terms on 2,000 mortgages a month according to the bank’s chief executive, David Duffy.
In an interview with Bloomberg, Mr Duffy said the arrears will be tackled by splitting mortgages, which will see part of the loan repayments put on hold until borrowers’ circumstances improve.
Mr Duffy said: “All the arrears book will have long-term restructuring in place by the end of the year, bar a small percentage.”
Mortgage restructuring is being increased from 1,500 to 2,000, as regulators have criticised Irish banks for being too slow to reduce the number of loans in arrears.
Irish Central Bank governor Patrick Honohan said last week it was “ramping up” its engagement with banks as they were “behind the curve” in dealing with mortgage arrears.
The International Monetary Fund in its quarterly report earlier this month also said reducing mortgage arrears and enhancing asset quality will be the priority for banks in 2013.
AIB currently has 33,000 mortgages in forbearance, where repayments have been reduced or suspended and in its interim report at the end of June 2012 18.5 per cent of mortgages with the bank were more than 90 days in arrears, including impaired loans.
Fifty-six per cent of the AIB’s core portfolio is related to residential mortgages and the bank needs to improve its asset quality to attract new investors next year.
Duffy added that AIB will also start to write off irrecoverable debts. However, he predicted that more repossessions will be inevitable and said the emphasis will be on seizing buy-to-let properties.
“If you start with our principle, which is to protect the home,” the emphasis will be on seizing buy-to-let properties first, he said. “Every case isn’t solvable.”