Bank of Ireland will veto full or partial debt write-offs

Bank of Ireland will seek to veto any personal insolvency arrangement which includes a full or partial mortgage debt write-off.

The toughest stand on home loan debt of any of the lending institutions has been branded “cruel” and “appalling” and contrasts with other banks that allow debt write-off in certain circumstances.

“It is neither a policy nor a practice of the bank to write off secured debt,” Bank of Ireland’s group chief executive Richie Boucher told members of the Oireachtas Finance Committee heard yesterday.

Mr Boucher, who earlier defended his €843,000 salary, said the bank will write off debt if a customer goes through insolvency or bankruptcy, but only when compelled to do so. “We do not do it voluntarily.”

He told Sinn Féin TD Pearse Doherty that the bank would seek to veto any arrangement that involved debt write-off where it had the power to do so. For a personal insolvency arrangement to be approved, a majority of the creditors must vote in its favour.

The bank’s use of veto was described as “appalling” by Mr Doherty, who took issue with the bank’s new policy of offering to pay back stamp duty to first-time buyers while, at the same time, insisting that the residual debt of those who have lost their homes through repossession or voluntary surrender is fully repaid.

In response, Mr Boucher said: “We have to be fair to all our customers.”

Last week, the Insolvency Service of Ireland said it had only managed to secure four mortgage write-downs in its first seven months.

The committee hearings on mortgage arrears and the resolution process being offered by banks continued for a third day yesterday. Ulster Bank, Permanent TSB, and AIB executives had appeared earlier this week.

Both Mr Boucher and Stephen Mason, from Bank of Ireland’s mortgage division, insisted that the bank’s handling of mortgage debt was superior to that of other lending institutions.

“We have made significant progress in mortgage debt arrears,” Mr Mason said. He said that 86% of customers who were offered a variety of debt solutions were meeting their arrangements, compared to 77% for the remainder of the industry.

Mr Boucher told Labour TD Kevin Humphreys that the consistent application of the bank’s procedures has meant that defaults and non-performing loans have come down relative to other banks. “We are performing better than the entire sector because we consistently apply our policies. We hear other banks with a different story. Our story hasn’t changed.”

Earlier, Mr Boucher described 2013 as a year of significant progress for the group during which it exited the Government’s Eligible Liabilities Guarantee Scheme, addressed deficits in its pension scheme and invested in IT infrastructure.

He added that the bank was “now comfortable and producing capital” and has repaid €1.8bn to the taxpayer.

Mr Boucher said the State’s 14% share in Bank of Ireland is currently worth in excess of €1bn.