Monday, April 2, 2012

AIB sets up mortgage unit 'to keep everyone in homes' - Independent.ie

By Laura Noonan

Saturday March 31 2012

BAILED-out AIB is creating a 400-man team to work with struggling homeowners so the bank can fulfil the "simple objective of keeping everybody in their home".

AIB's new chief executive David Duffy revealed the new initiative yesterday, and promised that his bank would soon "come out aggressively into the market" with new creative products to help struggling borrowers.

But Mr Duffy also warned that AIB's latest cost-cutting round "may well" result in closures across the bank's 267-branch network as the bank adjusts to life as a "much smaller" institution.

AIB has been bailed out to the tune of about €20bn, it booked loan losses of €8.2bn last year, although bottom-line losses came in at just €2.3bn after various adjustments.

The drive to help struggling customers comes after a dramatic surge in AIB's mortgage arrears in 2011.

By the end of the year, 15.5pc of AIB's Irish mortgage book was in arrears of more than 90 days -- up from 4.8pc at the end of 2010.

Extended

AIB has 'forbearance' arrangements in place for 22,611 mortgages, including 13,442 on interest only payments.

There are also 4,964 where the mortgage term has been extended, and 1,512 where arrears have been added onto the main loan.

Of those 22,611 loans, 17,358 are said to be 'performing'.

"The bank will work with people in a customised fashion to try and resolve every situation with the simple objective of keeping everybody in their homes," Mr Duffy said yesterday.

Mr Duffy said his bank had spent "the last number of months" talking to regulators about a "whole array of complex solutions" in line with the recommendations of the Keane report on mortgage debt.

"We hope to be able to come out aggressively into the market with those products as soon as we have full approval from the Central Bank," Mr Duffy said.

Proposals from the Keane report include allowing struggling borrowers to rent their homes from the banks, and allowing borrowers in negative equity to 'trade down'.

Mr Duffy didn't specify what solutions AIB was pursuing, but said he "didn't believe" debt forgiveness was "the right answer for a great majority of all people".

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