AIB has defended its policy on privately agreed debt write-offs for financially distressed borrowers saying there were “no special deals for special individuals”.
In an appearance before the Oireachtas finance committee, the bank’s managing director of retail banking, Jim O’Keeffe, rejected the idea that a debt write-down from the bank was “a prize for somebody to achieve”, pointing to the bank’s “robust” efforts to recover debts from borrowers.
The banker was addressing the committee on AIB’s policy on debt forgiveness in the wake of the controversy surrounding a €7 million debt write-off secured by Kilkenny hurling star DJ Carey.
AIB is 55 per cent owned by the State arising from its €20.8 billion bailout during the financial crisis.
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[ ‘Don’t tell me I got an easy ride’ - how one AIB borrower escaped €7m in debtsOpens in new window ]
Mr O’Keeffe faced questions on the bank’s debt settlement procedures, including from Sinn Féin’s Pearse Doherty who queried whether AIB had a special policy for “the top 1 per cent”.
I can categorically tell you that there are no special deals for special individuals coming to AIB
— Jim O’Keeffe, AIB managing director of retail banking
Mr Doherty said recent reports suggested “a very high profile individual” had a significant amount of debt written off when some others being pursued by the bank were unable to get a debt arrangement and couldn’t get millions or even thousands of euro written off their loans.
“We deal with every case consistently and fairly. We have a governing set of policies that are reviewed internally, right up to the board,” said Mr O’Keeffe. “I can categorically tell you that there are no special deals for special individuals coming to AIB.”
He told the committee that, since 2015, the bank had agreed settlements with about 1,900 borrowers where more than 90 per cent of their debts were written off.
These were agreed outside bankruptcy and insolvency processes. A further 4,300 borrowers secured debt write-offs in personal insolvency arrangements, a formal debt forgiveness mechanism.
[ AIB agreed 1,900 deals where 90% of debt written-off after financial crashOpens in new window ]
Without ever referring to Mr Carey for legal reasons, Mr O’Keeffe acknowledged that recent media reports had caused “a lot of heartbreak” for customers.
He apologised to customers put through “torture” from the reports or “if they have been made to feel that they have been subject to something that doesn’t happen to a wider group”.
When asked by Mr Doherty how many debt write-downs of more than 90 per cent for the 1,900 borrowers were for loans of over €1 million since 2015, he declined to say.
“But it is fair to say that within that grouping there would be loans of that magnitude,” he said. A majority of the loans would not be over €1 million, he said.
Whether the debt settlement involved sums ranging from €1 million to €4 million, they were “subjected to the same consistent policy application”, he said. “There were no special deals in that 1,900.”
Mr O’Keeffe said write-offs were agreed on “the basis of affordability”.
“It is not the old world of somebody landing into the bank and saying: ‘I am here I owe you x and I am going to cut a deal and we are going to halve it.’ That is not how we operate,” he said.
The banker said he could not provide a breakdown on the scale of write-offs for the 1,900 borrowers, citing “commercial sensitivity” before AIB published its 2022 financial results next week.
Mr O’Keeffe did disclose that AIB wrote off a total of €3.5 billion in debts between 2015 and 2021.
He agreed with a request from Aontú leader Peadar Tóibín to provide a breakdown on whether the 1,900 borrowers were developers, builders, farmers or “just ordinary people”.
“I would certainly like to dismiss the concern that this is a particular cohort of people,” said Mr O’Keeffe.
Mick Barry, People Before Profit-Solidarity TD, claimed there was a bias in the bank’s approach against smaller borrowers because the sums owed by big borrowers were larger.
He said that if a customer owed €5,000 to the bank and could not pay, the borrower had a problem, but if a borrower owed €5 million and could not pay, it was the bank that had the problem.
“The little guy loses out to a greater extent than the bigger guy,” he said.
