EBS posts record loss of €590m

EBS Building Society, bailed out by the Irish taxpayer, posted a record loss for 2010 as it prepares for a Government-ordered merger with AIB.

The net loss widened to €589.6 million from €78.8 million a year earlier as loan impairments soared after the country’s property bubble burst, the Dublin-based lender said in a statement today.

However embattled mortgage holders who are struggling to meet repayments were given a glimmer of hope when managing director Fergus Murphy said that the building society would consider writing off individual mortgage holders’ debts on a “case by case” basis.

EBS also suggested that while negative equity mortgages, whereby borrowers are allowed to sell their properties and carry their debt with them to a new property and mortgage, are not currently allowed under the rules that govern building societies, it may consider them once it is licensed as a bank under the new AIB structure.

The Government, which took control of EBS last year, in March scrapped plans to sell the building society to a group including US billionaire Wilbur Ross’s leveraged-buyout firm WL Ross and Dublin-based Cardinal Capital. The following day, Minister for Finance Michael Noonan directed EBS to merge with AIB as the results of a third round of stress tests on the country's banks were published.

According to Mr Murphy, the EBS brand remains in “good fettle” with savers, and the building society, which is paying interest at above the market rate, attracted 20 per cent of all new savings in the market last year. It reported total inflows of some €532 million, and while this is down on the €700 million reported for 2009, it now has a total share of 10 per cent of the national savings book.

"2010 will be remembered as a year of huge economic change in Ireland," EBS chairman Philip Williamson said in today’s statement. "During 2011, our focus will be on the successful formation of a 'pillar' bank through the combination of Allied Irish with EBS."

Total impairment losses on loans and assets, including a loss on loans transferred to the National Asset Management Agency, the country’s so-called bad bank, totalled €677 million, up from €78.8 million the previous year.

EBS, which received an €875 million State bailout last year, was ordered by the Central Bank to raise a further €1.5 billion of capital following the stress tests.

AIB chairman David Hodgkinson said earlier this week he expects the EBS brand to remain.

Bloomberg