Irish Nationwide reports €2.5bn loss

Irish Nationwide Building Society today announced losses of almost €2.5bn for last year.

The finance house said it had suffered massively building up business on a flawed model and ultimately faced unprecedented levels of impaired loans.

It has set aside €2.8bn to deal with its failing loan book.

Chairman Danny Kitchen said the property collapse compounded poor lending decisions by the society.

“The losses reflect unprecedented levels of impairment on our loan book which gave rise to losses on a massive scale in the context of the society,” he said.

“The collapse of property markets both in Ireland and abroad gave rise to the impairments but this was exacerbated by the nature of the operation of the business which was clearly a flawed model.

“The scale of the losses reflects the failure of the society’s commercial lending strategy which was over reliant on asset value.”

Irish Nationwide has been guaranteed €2.7bn of taxpayers’ money in a recapitalisation plan.

The annual results revealed customer deposits with the society dropped by €1.5bn last year to €5.3bn, mainly due to money being withdrawn from its subsidiary on the Isle of Man.

Chief executive Gerry McGinn said lessons of the past were being learnt.

“We have conducted a detailed analysis of the assets of the society and have created a fundamental change in the way the Irish Nationwide Building Society is managed, ensuring that robust corporate governance is in place and is effective.”