Banks should make their case for the defence

THE ‘solutions’ offered by Bill Hobbs (December 2) that AIB and Bank of Ireland (BoI) be nationalised, and that yet another State-appointed agency be created for oversight purposes, are indeed extraordinary.

As a shareholder and former bank chief executive (thankfully in neither institution), I wrote to AIB in May 2008 about what I thought was their over-exposure to the property market.

I quote an excerpt from their reply, signed by Dermot Gleeson, the bank’s chairman: “We are satisfied with our exposure to the broad property sector, as our loan book is well diversified across our markets, by (a) spread of location; (b) individual customer; and (c) sub-sector. Forty-five per cent of the exposure relates to assets located outside the Republic of Ireland; while 50% of the exposure is to the property investment sub-sector, which represents lending where cash-generated assets are held to service debt.” Mr Gleeson continued: “The residential development sub-sector in the Republic of Ireland has been impacted by the slowdown in residential sales. We are very conscious of the potential difficulties in this sub-sector and the portfolio continues to be reviewed and tightly managed in light of emerging market dynamics.”