IBRC continues to rack uphefty losses amid wind-down

The Irish Bank Resolution Corporation (IBRC) posted a loss of €724m for the first six months of this year. Operating profit for the period was €359m, but that was more than offset by a €1.09bn impairment charge.

Group chief executive of IBRC Mike Aynsley said: “The first six months of 2012 continued to present significant economic challenges for IBRC. Notwithstanding the continued macro economic challenges, the six-month period to 30 June 2012 was one of relative operational stability and steady progress towards the orderly wind-down of the bank.”

Net interest income for the six months was €538m, which was a 14% increase on the previous six months. Of the €1.09bn impairment charge and other provisions, there was a specific lending impairment charge of €878m.

The IBRC is responsible for winding down the operations of Anglo Irish Bank and Irish Nationwide Building Society. The process is scheduled to be completed by 2020. The bank estimates that total losses over that period will be between €25bn-€29bn. IBRC says it remains on schedule to stay within these estimates.

However, the quality of the bank’s loan book continues to deteriorate.

“The asset quality of the loan book is a reflection of the challenging economic and market conditions. The bank’s specialist asset recovery teams work with borrowers with a view to maximising recovery of the commercial lending book in the interest of the bank, the shareholders and the Irish taxpayer,” the bank said in a statement.

The total remaining value of its loan book at the end of June was €27.5bn, but 66% — €18bn — of this is now classified as impaired. A total of 87% of the bank’s loan book is now considered to be “at risk”. At the end of December, the impairment rate was running at 61%.

The Irish loan book has an impairment level of 68% — the highest of any region — with specific provisions totalling 43% of gross loans. Impairment levels are running at 62% of the UK loan book and 51% of the US portfolio. Within the bank’s €1.8bn residential mortgage portfolio, 45% of the loans are impaired.

There was further deleveraging over the six months from December to June. Assets excluding promissory notes and government bonds shrank from €25.3bn at the end of December to €21.9bn at the end of June. Total funding from the Central Bank and monetary authorities came to €42.3bn, which is 89% of the IBRC’s total funding.

The total staff headcount at the end of June was 1,031, down 15% from the end of Dec 2011. IBRC has 775 direct employees and a further 256 people who work for the bank’s Nama unit.

Further headway was made in trimming the cost base. At the end of June total operating expenses were €129m, down from €157m at the end of December.

Non-staff costs over the six-month period reached €70m, which was a €19m drop on the previous six months. Most non-staff costs relate to IBRC’s legal and other costs associated with asset recovery.

“Throughout the period the bank has continued to actively manage and vigorously defend all legal claims,” the bank said.


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