AIB dedicates team to ‘accelerated resolution’ of customer arrears

AIB has charged four senior executives at the State-controlled bank with accelerating a resolution of its customer "arrears challenge" so that it can attract external investment and deliver a return to taxpayers.

Chief executive David Duffy told staff yesterday a subgroup of the bank's leadership team has been formed to provide an "accelerated resolution" to its customer arrears problem, which he said was the "clear number one priority for the bank".

The subgroup comprises Anne Boden, chief operating officer; Bernard Byrne, director of personal, business and corporate banking; Brendan O’Connor, head of the financial solutions group (FSG); and Peter Rossiter, chief risk officer.

Mr Duffy said AIB has made “real progress this year in restructuring the borrowings of customers in arrears while at the same time transforming FSG into a single, cohesive business unit”. But he said a “further big push” was required to ensure the arrears problem was dealt with as “quickly and effectively as possible”. “A speedy and successful resolution of our arrears challenge is critical to the bank as a whole, both in terms of progressing with our path to investability and in terms of delivering to the Irish Government and taxpayers,” Mr Duffy said

He said supporting customers in financial difficulty was a strategic priority. “Achieving this objective while minimising losses and capital cost to the bank is key to returning AIB to profitability during 2014,” he said. “Additionally, our ability to deal fairly, transparently and quickly with our customers in difficulty will have a significant bearing on AIB’s performance and brand for many years to come.”

Losses down
The FSG unit at AIB is charged with dealing with customer arrears and handles about 1.2 million accounts. It made a loss of €486 million in the first half of this year, down from €777 million in the same period of 2012.

At the end of June 2013, 10 per cent of AIB’s Irish residential private home loans were in arrears of 90 days or more. Just under 14,000 mortgages, including buy-to-let properties, were in arrears of 90 days or more.

Mr Duffy’s note to staff came on the same day that the bank announced that it had raised €500 million via a transaction through Bank of Ireland, Merrill Lynch and Deutsche Bank, which is secured on a portion of its Irish credit card portfolio.