AIB faces Oireachtas finance committee over debt writedown deals 

AIB head of retail Jim O’Keeffe will tell the Oireachtas finance committee that around 150,000 customers have been supported by deals with the Financial Solutions Group, but only a small portion of those received near-total debt forgiveness.

Just over 1% of AIB customers who received debt writedowns got 90% of the money they owed written off, the bank will tell an Oireachtas committee on Thursday.

The bank's appearance at the Oireachtas finance committee comes in the wake of the agreement reached with former Kilkenny hurler DJ Carey. It is estimated that Mr Carey’s €9.5m debt was written down by about 80% when the sale of golf resort properties and a €60,000 settlement are taken into account.

News of his writedown led to politicians demanding answers from the majority-state owned bank and to AIB head of retail Jim O’Keeffe telling staff that “all appropriate avenues” to recover debts are exhausted before any debt writedown.

As reported by the Irish Examiner on Thursday morning, Mr O'Keeffe is expected to tell the committee that around 150,000 customers have been supported by deals with the Financial Solutions Group (FSG), which was established more than 10 years ago. However, only a small portion of those received near-total debt forgiveness.

"The number of borrowers, other than those who went through a bankruptcy or insolvency process, who have received a reduction of over 90% of their loan amounted to circa 1,900. Compared to the circa 150,000 customer resolutions already referenced, this represents a ratio of just over 1%."

'Robust criteria'

Mr O'Keeffe will tell the committee there are "robust criteria" for any debt writedown. He will add that these are based on individual circumstances and include that "all such proposals must be supported by full and transparent disclosure of a customer’s financial affairs" which includes assets owned, income earned or anticipated, and "any other relevant information required by the bank". He will say that these disclosures are subject to independent validation "at the bank’s discretion".

Other criteria include the customer demonstrating a willingness to meet their "contractual obligations" while "maintaining a reasonable and benchmarked lifestyle". Proposals must also address all of the borrower’s obligations with the bank and take into account any third-party debt. The level of sustainable and unsustainable debt will be determined by the bank "based on an assessment of the borrower’s affordability".

It is estimated that DJ Carey’s €9.5m debt was written down by about 80% when the sale of golf resort properties and a €60,000 settlement are taken into account.

Mr O'Keeffe will also say that the bank is unable to speak about one case in particular but that some of the commentary around Mr Carey's deal and the bank's broader policies was "incomplete".

"We have been aware, obviously, of recent commentary about our approach to supporting customers in difficulty and the policies underpinning same. Unfortunately, many aspects of this commentary have been incomplete and have not presented the full picture. We have maintained our position that we are not enabled or entitled to discuss the details of any particular account regardless of the historic or current relationship with the customer involved.

"However, we have also reaffirmed that the bank has a proven track record in supporting customers in difficulty and, as a regulated entity, has a robust governance and policy framework in place that deals in a consistent and equitable manner with customers whose accounts become challenged. That framework prioritises restoring customers to a sustainable relationship with the bank on a consensual basis."

Mr O'Keeffe will also tell the committee that around 4,300 customers had been supported through the use of personal insolvency arrangements (PIAs) and that the FSG had helped to reduce the bank's non-performing loan exposure position from €30bn at its peak post the financial crisis to its current position of around €300m.