Negative equity for 12,000 Bank of Ireland mortgage holders

More than 12,000 home-owners who have mortgages with Bank of Ireland are in negative equity, it was revealed today.

Chairman Richard Burrows said he would stand down in July over the lender’s massive losses and apologised for a nosedive in profits.

The bank’s preliminary results revealed that 6% – or around 12,200 – of its residential mortgages were now costing homeowners more than the value of their home.

Chief executive Richie Boucher accepted the bank had made mistakes over recent years that led to their profits being virtually wiped out.

“In light of the figures, yes, mistakes have been made. We made mistakes in terms of our view of the economy,” he said.

But Mr Boucher insisted a lot of progress has been made in the last couple of months in stabilising the bank and he would continue to work towards that.

The bank chief insisted it would not need any more public money after the Government’s recent 3.5 billion euro recapitalisation and ruled out the need for nationalisation.

Bank of Ireland announced a pre-tax loss of €7bn for the year to the end of March, after writing off €1.4bn in bad loans.

The bank made a pre-tax profit of €1.9bn the previous year.

Mr Boucher said today that he expects more bad loan losses and less business activity in the year ahead but vowed to rebuild the firm.

Bank of Ireland expects to write off €4.5bn in bad loans in the three-year period to March 2011.

Profits in its retail banking business in Ireland collapsed to €20m from more than €700m a year earlier.

But Mr Boucher insisted the bank continued to have fundamentally sound businesses.

“Following the support of the Irish Government, we are confident that Bank of Ireland will emerge from this recession as a vibrant financial services company,” he said.

“We will play our full role in the recovery and renewal of the economies in which we operate.

“And through this, over time, we will rebuild the value in the Bank of Ireland Group for our stockholders.”

The firm said it will work closely with the National Assets Management Agency (Nama), which aims to buy bad loans from banks included in the Government’s state guarantee.

Mr Burrows apologised to shareholders and said he was taking accountability for falling profits and share prices.

“We are working towards restoring the trust of our customers, the general public and our stockholders,” he said.

“Accountability for these losses must be taken at the top and, accordingly, I have informed my fellow directors of my personal decision to stand down,” he said.

A recruitment process to select a successor to Mr Burrows has begun. Senior Bank of Ireland executive Mr Boucher replaced Brian Goggin as chief executive in February.