INBS €3.3bn loss ‘final act of tragedy’

THE IRISH Nationwide Building Society (INBS) has reported “catastrophic losses” of €3.3 billion for 2010 in what management has called “the final act of a tragedy”.

The institution’s current executive management team — chief executive Gerry McGinn and chief financial officer John McGloughlin — said the losses reflected a “totally flawed” business model at the company, while the new figures also revealed that nearly 30% of its mortgage customers are in arrears.

In its last two years of existence — the company is currently in wind-down mode and is due to be merged with Anglo Irish Bank later this year — INBS has recorded a combined loss of €5.8bn, having made a loss of €2.5bn in 2009.

Earlier this week the last of INBS’ branch network closed, its customer deposits transferring to Irish Life & Permanent. Yesterday Mr McGinn said the end of INBS, in its current guise, brought with it “huge anger” and “some sadness”, for the taxpayers’ burden and innocent staff who had nothing to do with the previous management’s reckless commercial lending practices, respectively.

The latest INBS figures also show that as much as 27% of its €2bn mortgage book is in 90 day+ arrears, equating to 1,855 customers out of 15,000. This is well above the 11% mortgage arrears average as reported yesterday by the Central Bank.

The €3.3bn loss comprises €2.8bn on discontinued operations and €547m on continuing operations, the latter including further loan impairment provisions of €504m.

While not much detail about the pending amalgamation with Anglo was available yesterday, management said it is being done in a “timely and orderly manner” and more clarity should be evident by July.

While €400m of its commercial loans are still bound for NAMA (and should transfer in the next couple of months), bringing that total to €8.9bn, Irish Nationwide will be bringing its €2bn mortgage book and €600m non-NAMA bound loans to the new entity. Sooner than that — by the end of this month, in fact — it should be known whether Anglo and INBS will need yet more state funding.

Mr McGloughlin, however, yesterday expressed his confidence that INBS (which has, to date, received €5.4bn in Government/taxpayer bailouts) will not need any more.

“We’re confident it won’t be necessary for the Government to write another cheque,” he said.

Mr McGloughlin also confirmed that INBS’s current management team has, on numerous occasions, sought to contact former chief executive Michael Fingleton about the potential repayment of his controversial €1m bonus payment, but hinted that hopes were not currently high of reclaiming the money even though Mr Fingleton previously promised to repay.