Repossession is ‘too difficult’ here – AIB chief executive

THE boss of AIB has complained about how difficult it is to repossess homes when mortgage holders get into arrears.

And Bernard Byrne said the move by regulators to force banks to maintain “conservative” capital levels will mean higher costs for customers.

Mr Byrne (below) is today due to address the Oireachtas Finance Committee, chaired by TD John McGuinness.

He is set to tell the politicians that the demands of regulators that banks hold lots of capital carry cost implications for the bank.

“It is also legally and culturally difficult for a bank in Ireland to realise its security over loans

– a fact that leaves investors wary and regulators concerned about the capital required to support such activities.”

Mr Byrne’s comments come after the Central Bank said Storm Emma was the reason for a rise in the number of people falling behind on their mortgage payments in the first three months of the year.

New figures from the Central Bank show close to 72,000 people were in some form of arrears in the first quarter, reversing a trend of continuous falls up to now.

The Central Bank said people unable to get into a bank branch due the storm was the reason behind around 300 new cases of arrears, which were mainly those who are less than three behind on their payments.

The figures also show that accounts in arrears over two years declined slightly to just under 30,000.

This week the AIB Group was forced to admit another 500 tracker denial cases at its subsidiary EBS. The group has close to 12,000 tracker-denial cases.

AIB is one of several Irish banks caught up in a mortgage overcharging controversy which has seen banks identify about 37,000 accounts which had the wrong interest rate applied to their loans, or were not offered tracker mortgages, closely tied to the European Central Bank’s key rate, when entitled to them.

The bank is working on a “final group of outstanding cases” and expects to have paid compensation to those customers by the end of September, Mr Byrne will say.

The Government spent almost €21bn bailing out AIB during the financial crisis. It sold approximately a third of its holding in the bank last year and retains 71pc of the lender.

The current value of AIB “positions the Government to recoup its investment”, Mr Byrne will say.