No other bank planning AIB-style debt write-off

None of the other major banks in Ireland are planning on following AIB’s steps and offering customer a debt write-off in limited circumstances.

While all of the main Irish banks are bound by the mortgage arrears resolution targets which force them to offer sustainable solutions to 75% of mortgage holders in arrears by June of this year, none of the other pillar lenders are offering debt write-offs.

A spokesperson for Ulster Bank put it bluntly saying that the bank simply “does not have a policy of writing off debt.”

Bank of Ireland said that it had a full range of options for customers in arrears, but did not elaborate on whether it would be allowing debt write-offs.

“Supporting our customers in financial difficulty is a key priority for Bank of Ireland and our aim is to provide sustainable treatments for our customers facing financial difficulty or who are already in arrears. The bank has a comprehensive menu of forbearance treatments including a split mortgage option,” a spokesperson said.

PTSB similarly stated it had no problems with the existing arrears solutions that it had in place.

“Permanent TSB keeps its split mortgage offering, which warehouses a portion of a mortgage in a separate facility that incurs no interest, under review but has no current plans to amend it.

“The structure and features of our split mortgage are working well and are being well received by customers in arrears or in forbearance, with more than 4,000 split mortgages accepted by our customers to date,” the bank said.

While the other banks are not rushing to follow suit, mortgage action group New Beginnings is warning the AIB deal will have downsides.

The group welcomed that AIB would offer some write-down as a step in the right direction, but warned that the split mortgage solution would result in people living on the bare minimum for 30 years.

“People need to be aware of the very real downside to split mortgages as currently offered by AIB and others. The primary downside is that the borrower is expected to live on bank-determined guidelines for the full length of the mortgage which can be for 30 years.

“These guidelines mean that borrowers will live on minimum income with the rest going to the bank. While this may be acceptable for a defined period of time, split mortgages mean minimum standards of living for life,” co-founder of New Beginning, Ross Maguire said.