AIB chief executive David Duffy has said the bank would make contact by the summer with its 33,000 mortgage-holders who are in arrears, with a view to agreeing deals with them by the end of the year.
Mr Duffy said he was confident the bank would be able to work out a deal with all willing customers by the end of the year.
Speaking in Galway, where he is conducting a series of meetings with staff and customers, Mr Duffy did not rule out mortgage write-downs in some cases.
He said a primary target was to return the bank to profitability by 2014 and a significant part of that strategy was to sort out the mortgage crisis.
‘Substantial organisation’
“Over the past year we have built a fairly substantial organisation of a couple of thousand people who deal with servicing all the Nama loans from the past and any restructuring of debt, whether they be mortgages or SMEs.”
Mr Duffy said the bank would work with mortgage-holders in arrears to find solutions.
“The guiding principles for that mortgage restructuring process are that firstly we try to keep people in their homes wherever possible, or a suitable home; and secondly that we try come up with a sustainability strategy that stabilises everybody in the first instance, but then you move on to what is a sustainable debt level for that person,” he said.
“And that is a discussion with the individual and we determine what looks like a long-term sustainable number and then we will include in the solution we ultimately offer some form of debt restructuring which would mean in some case a write-down of the total level of debt, subject to a performance period,” he said.
Mr Duffy said AIB was increasing the amount lent each year: “We began the work last year, laying the foundations, and the positive side of that is that we were able to move from 28 per cent of the mortgage market in 2012 to 45 per cent of the sanctions by the end of the year. In total that was €1.5 billion of lending into the mortgage space versus our original target that we had set ourselves of €1 billion.
“On the SMEs we lent €4.8 billion against a target that the Government has set for us of €3.5 billion.”