EBS BUILDING Society told members yesterday that it expects to write off up to 37 per cent of the €512 million that it loaned to property developers.
Even though EBS is a mutual society, the company expanded into property development loans in 2005 in a bid to boost returns to members as margins in its traditional businesses were under pressure.
Speaking to members at the building society’s annual general meeting in the Burlington Hotel in Dublin, chairman Martin Moran, said the company now expects that it will have to write down the value of those loans over the next three years.
“We are expecting to provide for 37 per cent of that business over the next three years,” he said, adding that there will be write offs against the loans’ value in 2009, 2010 and 2011. That would amount to losses of almost €190 million on its foray into development finance.
The company took €69 million off the loans’ value last year, and expects to take a further €33 million hit this year. Last March, it said that 35 per cent, €179 million, of the developments loans were “impaired”.
Last year’s writeoff left the building society with a €38.2 million loss.
Mr Moran yesterday resigned as chairman as a result of the company’s poor performance, a move he had announced when the company published its annual results earlier this year.
Former chief financial officer, Alan Merriman, resigned earlier this year.
One shareholder yesterday questioned why directors Cathal Magee, who chaired the EBS risk committee, Eimear Finneran, who oversaw strategy, and Barbara Patton, head of the remuneration committee, did not follow their fellow board members.
The three acknowledged that the question was valid and said that they had considered their positions, but stressed that continuity was important.
Mr Magee said that, once they had brought forward new directors, it would be “timely” to consider their own position.
Ms Patton said that she had seriously considered not seeking re-election to the board and had only decided to stand this year after talking to a number of people in the organisation.
EBS members re-elected Ms Patten, with 5,934 votes, to the board yesterday. They also re-elected chief executive, Fergus Murphy with 9,265 votes.
External candidates former Garda assistant commissioner Martin Donnellan, 7,819 votes and solicitor Linda O’Shea Farren, 7,146 were also elected yesterday.
Executive director, Tony Moroney, who is managing director of EBS subsidiary Haven Mortgages, failed to be re-elected. He got just 3,612. Another external candidate, Mark Connolly, also failed to secure a seat, with 5,700 votes.
