AIB stays silent on bad loan book sell-off speculation

AIB remains tight-lipped on claims that the bank is actively planning to sell off a loan book composed of 35 of its largest distressed borrowers to vulture funds.

The State-owned bank is also staying silent on repeated reports that it is considering the sale of a book of under-performing mortgage debt in an effort to reduce the size of its non-performing loan book which currently stands at €8.6bn.

Experts say the fresh claims, which follow confirmation from Minister for Finance Michael Noonan that the Government will sell-off a 25pc share in the bank later this year, will trigger fears among thousands of indebted farmers that their loans could be offloaded to vulture funds.

Last week the IFA met with AIB to highlight the importance of not selling off farmer loans.

Farm groups are continuing to monitor the situation very closely. Matt Carey, a debt resolution advisor who represents many farmers, says a bad loan book selloff at AIB is “inevitable”.

“There is a specific process that has happened here since 2009. First, the debt is taken out of the bank; secondly, it is put into a debt recovery unit so the bank can deal with it more specifically, and if you cannot get the money, the third step is to send it out to litigation to examine the loan’s security.

“If you’ve gone through all these processes and failed to find a resolution, most, if not all, other banks in this country offload their debt,” said the former manager with ACC Bank.

“It’s part of the process and I don’t see any reason why AIB ultimately won’t do the same. It is the natural thing for them to do,” he said.

Martin Stapleton, IFA farm business committee chairman, said: “Farmers in arrears with AIB are concerned the loan book might be sold. Those farmers are entitled to the security of continuing to deal with the bank they borrowed from.”

ICMSA president John Comer urged the Central Bank to “publish specific guidelines for farmers whose loans have been acquired by vulture funds”.

ICSA rural development chairman Seamus Sherlock said: “ICSA will not allow farmers, who are making a real effort, to have land sold out from under them”.

In a statement, AIB said it remains committed to working with farm customers in difficulty.

“AIB has reduced its impaired loans to €8.6bn from a peak of €29bn over three years. The bank remains focused on reducing impaired loans to a level more in line with normalised European peer levels and will continue to implement sustainable solutions for customers who engage with the bank where feasible”.