AIB defends debt deals following DJ Carey criticism

AIB has addressed the controversy around the bank’s debt write-down for hurling star DJ Carey telling staff in an internal memo that it exhausts “all appropriate avenues” to recover debts.

In the circular, the bank’s head of retail banking, Jim O’Keeffe, did not name Mr Carey, saying that he could not comment on individual cases for legal reasons, but told staff that he wanted to clarify AIB’s approach to debt write-downs in light of “commentary in recent days.”

In the memo, seen by The Irish Times, Mr O’Keeffe told staff that “some of the external commentary over recent days does not provide the full picture” and that the bank had a “robust governance process for debt resolution and this process was followed”.

RTÉ reported last Friday that Mr Carey’s debt judgment of €9.5 million was written down with a settlement of €60,000, which the broadcaster said represented a 99.4 per cent write-down on the original debt.

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However, the report did not take account of the sale of golf resort properties securing the debt at the K Club in Co Kildare and at Mount Juliet in Co Kilkenny in the years after the 2011 judgment and how the sale proceeds went towards the reduction of Mr Carey’s debt to the bank.

It is estimated that Mr Carey’s €9.5 million debt to the bank was written down by about 80 per cent after the sale of the golf resort properties and the €60,000 settlement are taken into account.

The judgment was secured in 2011 mostly on a €7.85 million loan to Mr Carey secured on the properties at the K Club and Mount Juliet golf resorts.

[ Analysis - DJ Carey: eye-watering debt write-off deals now common on Celtic Tiger loans ]

In the wake of the report on Mr Carey’s write-down, Government ministers and opposition politicians called for AIB to appear before the Oireachtas finance committee to answer questions on the bank’s debt agreement with the hurling star.

In his memo, Mr O’Keeffe set out the procedures followed by the bank to recover debts where AIB has secured a judgment against a borrower over outstanding debts.

“In situations where the legal system is ultimately required to resolve cases, we may seek judgment to allow us dispose of the secured assets and wider assets if appropriate, he said.

“In such cases, the process seeks to exhaust all appropriate avenues to realise value of the bank from any available secured assets.”

Mr O’Keeffe told staff in the circular sent to thousands of AIB staff on Tuesday that the bank may also “take account of third party certification as to a borrower’s income and asset status and may also consider other documentation relating to the borrower’s personal circumstances”.

He said that “where customers are in financial difficulty, our resolution process is based on their ability to repay, taking account of the customers’ assets and their sustainable income levels”.

This approach had been applied to more than 150,000 customer cases over many years “in a fair and consistent manner” and that “the vast majority” were able to meet their new arrangements and “move on with their personal and business lives”.