BoI rules out mortgage write-downs

Bank of Ireland wanted to deal with the most distressed mortgages more quickly than it has but there was a desire that all banks move at the same time, the bank's chief executive Richie Boucher has said.

Mr Boucher told the Joint Oireachtas Committee on Finance, Public Expenditure and Reform that the bank was processing just 13 mortgage-to-rent cases for customers, one of the products being made available for customers who have unsustainable mortgages, but that it would like to move more quickly to tackle problem mortgages.

Bank of Ireland was required to go through a consultation with the Central Bank on products to help customers such as assisted sales of properties and trade downs to smaller properties and it also had to work with third parties such as the Department of the Environment on the mortgage-to-rent schemes.

"We are keen to get on with things and that is what we are focused on," he told the committee."There has been some desire to move all of the wagons together in terms of the banking sector and we would have liked to have got on with some stuff more quickly ourselves."

The banks were berated publicly last month by the Central Bank's director of banking supervision Fiona Muldoon for moving too slowly to deal with customers who had missed mortgage repayments and who had unsustainable mortgages that they would not be able to repay.

Sinn Féin TD Pearse Doherty described the number of mortgage-to-rent proposals being processed by Bank of Ireland as "pathetic".

Mr Boucher ruled out a general write-down of debt for the bank's mortgage customers who were in trouble, saying that the capital injected into the bank by the State was "not allocated for write off".

"It's a transfer of someone else's money to someone. We deal with our customers on an individual-by-individual basis,” he said. “A blanket transfer of cash from depositors or shareholders to another form of the customer base is not something that we can do.”

Mr Doherty said the State had invested in the bank on the basis of stress tests and hundreds of millions of losses on mortgages.

"Yet the bank is refusing to write down any of that money and is hoping that the customers pay every single penny of that back to the bank and will pocket the capital that the taxpayer paid," he said.

Mr Boucher declined to say how much mortgage debt the bank had written down for customers. There were 222 cases where borrowers were on advanced forbearance measures beyond interest-only payments or term extension arrangements at the end of June, he said.

The State has invested more than €4 billion into Bank of Ireland and has a 15 per cent shareholding in the lender, the only Irish bank to have avoided Government control.

The bank said that it had restructured or modified 16,000 mortgages and that 86 per cent of these customers were meeting their repayments following this restructuring.

Mr Boucher said that the pace of increase in mortgage arrears has continued to abate and that house prices have stabilized following a peak-to-trough fall of 55 per cent plus an additional 10 per cent on "realisation".

There were no immediate plans to increase standard variable mortgage rates but would not rule out future increases, saying that this would depend on the cost of funding to the bank, he said.