AIB twice as likely as Bank of Ireland to pursue customers

AIB, the State-owned bank, is twice as likely as its main rival, Bank of Ireland, to pursue its customers through the courts over unpaid debts, according to official court records.

An analysis by The Irish Times of all summary judgment cases filed since the beginning of the year reveals AIB is by far the most aggressive bank in the State when it comes to filing such High Court actions against debtors.

Summary judgments applications are when banks or other lenders apply to the court for a fast-track ruling without a trial or witness evidence.

Edmund Honohan, the Master of the High Court and a brother of Central Bank governor Patrick Honohan, has previously criticised banks for the volume of summary judgment cases, questioning whether they give borrowers a fair chance to defend themselves.

Unpaid debts

AIB had, by the end of last week, filed at least 275 summary judgment actions in 2015 against its customers over unpaid or disputed debts, more than 40 per cent of the total in the State.

Bank of Ireland, which has a larger loan book than AIB, had filed only about 140 cases. Bank of Ireland, however, is twice as likely as AIB to resort to court action against homeowners over mortgage arrears.

About 73 of Bank of Ireland’s applications, more than half its total, were in the name of its mortgage bank.

About 70, or roughly a quarter, of AIB’s summary applications were made by its mortgage arm, indicating the bank reserves the court tactic primarily for non-mortgage borrowers, such as businesses and unsecured loans.

The next most aggressive bank in chasing customers through the courts is Danske Bank, which is winding down its operations here. It has filed just a fraction of the number of cases of its larger rivals, 33 so far this year, but it has a much smaller loan book.

Permanent TSB, which like AIB is State-owned, has not resorted to court action against a single customer in 2015, after filing 10 such cases in 2014.

Start Mortgages, the subprime lender, has filed 10 summary judgment actions so far this year, while ACC has filed 12. The Irish operation of Bank of Scotland, which is also winding up it Irish loan book, has filed 16 such actions.

The National Asset Management Agency, which usually seeks summary judgment against developers with whom it can't agree repayment schedules, or who breach previous agreements, has taken eight of its clients to court this year.

Responding to the findings a spokewoman for AIB said the bank’s policy was to agree solutions with customers “based on maximum affordability relative to existing debt levels and cash flow expectations” and that “in all cases the bank seeks a non-legal resolution and implementation of a consensual debt restructuring with borrowers”.

Reduced arrears

“AIB reduced its volume of impaired loans by 23 per cent in 2014 from €29 billion to €22 billion. The bank also reduced mortgage arrears in its Irish residential mortgage portfolio by 18 per cent in 2014 in part due to significant levels of debt restructuring agreed with customers on a consensual basis.’’

A Bank of Ireland statement said: “Where customers are encountering difficulties meeting their repayment commitments, it is our policy to work with them to find solutions that are sustainable and meet the needs of both the customer and the bank. We will work with each customer on a case by case basis and will offer a range of options to help them work through their issues. The decision to refer the matter to the courts is a final resort for the bank when all other options have been exhausted.”

Writing in the Irish Times last year, Edmund Honohan suggested some Irish summary judgment actions could breach European human rights legislation.

He said the procedure often favoured plaintiffs, and expressed concern that the number of applications was, 12 months ago, on the rise.

Since Mr Honohan expressed his concerns, the volume of applications from Irish banks has slowed slightly.