Oireachtas Joint and Select Committees
Thursday, 2 March 2023
Joint Oireachtas Committee on Finance, Public Expenditure and Reform, and Taoiseach
Debt Write-down and Debt Resolution Policies: Allied Irish Banks
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Apologies have been received from Senator Higgins. Today's meeting is with officials from AIB to discuss the bank's debt write-down or debt resolution policy. We are joined by Mr. Jim O'Keeffe, Ms Paula Duffy, Ms Rachel Naughten and Mr. Tom Kinsella. They are very welcome. Some of their colleagues are in the Public Gallery. They, too, are welcome.
Those present are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against a person or entity by name, or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or the entity involved. I remind members that those on the campus have full privilege, but those joining us remotely might not have full privilege.
Before inviting Mr. O'Keeffe to give his opening statement, I draw attention to the media reports concerning individuals involved in this matter. We generally do not deal with individual cases, and I remind members and the witnesses of that. For purposes of transparency, I also put on record that I know one of the individuals who has been reported on in the newspapers.
Mr. Jim O'Keeffe:
I thank the members of the joint committee for inviting us today. I am joined by my colleagues, Ms Paula Duffy, head of financial solutions group, Ms Rachel Naughten, head of portfolio management, and Mr. Tom Kinsella, head of homes. Today we discuss AIB’s policy on resolution of customer debt and the bank’s processes for determining the nature of its resolution outcomes, including debt write-down in certain instances. We will also address questions about the number of cases, outside of bankruptcy and insolvency arrangements, where the debt write-off exceeded 90% of the loan. We welcome this opportunity but must emphasise that the bank is not permitted under law pertaining to customer confidentiality to reveal or discuss details of any particular account or customer transaction. Notwithstanding this constraint, we believe we can provide sufficient information and general detail to provide the committee and the wider public the level of assurance required with respect to the bank’s robust, fair and consistent approach to supporting customers in difficulty.
We wish to highlight the fact that, when AIB enters a lending relationship with a customer, it hopes never to have to manage a situation where the customer is challenged to meet the agreed repayment terms of his or her loan. In the event this does happen, AIB has a dedicated, experienced and well-resourced unit that supports customers in difficulty and the resolution of non-performing exposures, NPEs, in line with regulatory guidelines and expectations. AIB established the financial solutions group, FSG, to deal with the fallout of the global financial crisis and the financial difficulty this created for some borrowers, including the sharp discounting in assets' values. The FSG has developed in the intervening years against the backdrop of a slowly recovering macroeconomic environment and an evolving regulatory framework. Since its inception more than ten years ago, the FSG has been a well-resourced support unit, with 1,500 people at its peak.
The comprehensive list of initiatives and supports offered by AIB for customers in difficulty include: a comprehensive programme following the issuance of the Keane report, which served as the foundation for all solutions and procedures for mortgage customers in difficulty; expansion of the range of solutions to include positive equity sustainable solutions and low-fixed rate solutions; enhanced mortgage-to-rent solutions; a dedicated programme to ensure customers with private dwelling home loans were afforded every opportunity to engage with the bank and that such loans were the last to be included in any sale of NPEs; ongoing engagement with the Housing Agency to review and consider for purchase vacant properties, with circa 400 properties already sold via this relationship; an approach to loan sales that enabled affected SMEs to operate to the maximum of their overdraft limits to ensure minimal impact on cash flow; the opportunity for customers to engage right up to the signing stage on loan sales; and the ability for the FSG to adapt and provide support to our customers during Covid and the implementation of close to 90,000 loan payment breaks during that period.
Throughout this programme, AIB has worked closely with and partnered with agencies such as the Irish Mortgage Holders Organisation, iCare, the Money Advice & Budgeting Service, MABS, and the Housing Agency and the bank engages fully with resolution mechanisms that arose from legislative action in this area, such as personal insolvency arrangements, PIAs.
Given the scale of these undertakings and the period over which they have been put into practice, it is important that we reassure the committee about the framework of controls that has been put in place to ensure our actions are consistent, fair and robust. This framework includes: board approval of our strategy for supporting customers in difficulty, subject to annual review; all decisions being subject to review and challenge by our second line credit risk function and subject to specific themed reviews by group internal audit, providing a third level of assurance; external regulatory case reviews from a prudential and consumer perspective, including a number of on-site reviews by the joint supervisory teams, and annual case reviews by the external auditor; and an extensive strategy and operational NPE plan, as required annually by the European Central Bank, ECB.
This framework of controls and range of policies and solutions has enabled us to balance our prudential requirements to reduce our non-performing loan exposures while at the same time treating customers fairly and consistently. This governance structure and solutions-based approach has enabled the FSG to support close to 150,000 customers in returning to a sustainable financial position and also enabled those customers to proceed with their personal, family and business lives. The FSG has also played a key role in reducing the bank's legacy non-performing loan exposure position from €30 billion at its peak post the financial crisis to its current position of circa €300 million. I will outline how this framework and these processes are applied in more detail in just a moment, but in essence, they are based on a customer's ability to repay, taking account of the customer's assets and his or her sustainable income levels and prospects.
Our policies are directed by clear rules and principles that are applied consistently with respect to the identification, assessment, granting, management, monitoring and reporting of forbearance processes and decisions, in line with regulatory requirements. Our primary objective is to engage with the customer and to make every effort to come to an agreed arrangement to adapt to his or her changed financial circumstances.
The assessment and resolution of NPEs takes place against the bank's broader requirement to operate prudently and commercially. As a regulated entity, we must ensure we generate sufficient returns on capital to act as a key driver of economic growth, maintain appropriate reserves and retain investor confidence, including on the part of the State as our largest shareholder.
Our work in the area of forbearance and support of our customers in difficulty falls into two broad categories: outcomes that are achieved on a consensual basis with customers; and those, a minority, that need to be pursued on a non-consensual basis. In consensual engagements, each customer's circumstances are assessed on a case-by-case basis and each customer is offered a clearly defined means of engagement and assessment determined by the nature and terms of his or her loan. A broad suite of solutions is applicable and may include, in the short term, agreed stabilisation periods to allow a customer's previous income levels to resume. Our longer term solutions include split mortgages, which enable an element of debt compromise and customers to retain their homes, and, where there is no affordability capacity, mortgage-to-rent arrangements, which can involve a substantial level of debt write-off while enabling a borrower to remain in his or her home. All forbearance solutions are reviewed regularly to ensure they are appropriate to customers' evolving circumstances and the bank's fiduciary and regulatory obligations. This has required us to adapt some solutions that otherwise might have involved the accounts concerned being classified as non-performing under evolving domestic and European regulatory parameters.
In the event a customer does not engage or co-operate to seek an agreed forbearance arrangement, the bank, having followed all reasonable steps in the appropriate regulatory framework, may seek to recover the debt through the legal process. The objective of such a course of action would be to prevent any further weakening of the bank's position and to allow for the disposal of secured assets either via a court order or through the appointment of a receiver. The bank may also seek to obtain a court judgment in respect of any unresolved element of debt following an asset disposal process. Legal action generally only arises where customers have not engaged with the bank about their non-performing debts. They are still afforded the opportunity to engage or re-engage to settle any outstanding liability at any stage in the process, including post disposal of the assets involved. If they do, this may lead to a situation where a final settlement or compromise is agreed that may include a partial or full write-off of debt. Any such agreement is, as always, based on affordability and sustainability criteria.
Throughout the consensual and non-consensual routes, borrowers have the option of pursuing PIAs or, in the case of business customers, the recently established small company administration rescue process, SCARP. AIB has a proven track record in terms of its participation in this legislative process. The bank has consistently led the way in agreeing to outcomes under PIAs, with strong approval rates of circa 4,300 arrangements over a number of years, while accepting that these agreements invariably result in a lower level of debt recovery overall. AIB's debt resolution framework allows for and enables agreement on the bank's part to a final settlement with borrowers that may include the write-down of outstanding debt in certain circumstances. These circumstances will vary from borrower to borrower, but the overriding principles governing resolution of the position for both the customer and the bank are applied consistently on every occasion.
I will now set out the key criteria required for any final debt settlement, including possible debt write-off in certain cases. The bank evaluates proposals for debt settlement based on a borrower's individual circumstances. All such proposals must be supported by full and transparent disclosure of a customer's financial affairs. This disclosure will cover, among other matters, assets owned, income earned or anticipated, and any other relevant information required by the bank. These disclosures are subject to independent validation at the bank's discretion. The customer must demonstrate a willingness to meet his or her contractual obligations while maintaining a reasonable and benchmarked lifestyle and, in the case of a business, its viability. Proposals must address all of the borrower's obligations with the bank and take into account any third-party debt. The level of sustainable and unsustainable debt will be determined by the bank based on an assessment of the borrower's affordability. Proposals will include a requirement on the part of the borrower to make available to the bank any windfall income that may accrue within a set period following a settlement.
In the context of these robust criteria, the number of borrowers, other than those who went through a bankruptcy or insolvency process, who have received a reduction of over 90% of their loans amounted to circa 1,900. Compared with the circa 150,000 customer resolutions already referenced, this represents a ratio of just over 1%.
We have been aware, obviously, of recent commentary about our approach to supporting customers in difficulty and the policies underpinning same. Unfortunately, many aspects of this commentary have been incomplete and have not presented the full picture. We have maintained our position that we are not enabled or entitled to discuss the details of any particular account regardless of the historic or current relationship with the customer involved.
However, we have also reaffirmed that the bank has a proven track record in supporting customers in difficulty and, as a regulated entity, has a robust governance and policy framework in place that deals in a consistent and equitable manner with customers whose accounts become challenged. That framework prioritises restoring customers to a sustainable relationship with the bank on a consensual basis.
In the minority of cases where customers decline to engage with us or via third party resolution mechanisms, the same governance and policy framework directs how the bank seeks to recover its interests in the most appropriate manner. We again thank the committee for the opportunity to address these issues and we are happy to answer any questions members might have.
Pearse Doherty (Donegal, Sinn Fein)
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Cuirim fáilte go dtí an coiste roimh an Uasal O'Keeffe agus a chomhghleacaithe. The public is well aware that it had to rescue AIB with €21 billion pumped into it. The public is also aware of the inappropriate actions taking place within the bank that led to a record fine last year of €83 million. In the past couple of days - I am not asking the witnesses to talk about an individual case - there has been a media report suggesting that a very high-profile individual had a significant amount of debt written off. I know Mr. O'Keeffe may dispute the accuracy of the report but I do not think he would dispute the fact that millions of euro of debt was written off by AIB. I have emails from people about being pursued for residual debt, being unable to get an arrangement with AIB and still having to pay a mortgage to AIB on a mica-affected home that is lying in blocks on the ground after being demolished. They are asking whether AIB has a policy for the top 1% of people in this country because they could not get millions of euro of debt written off. They could not even get thousands of euro of debt written off. The public deserves an answer to this.
Mr. Jim O'Keeffe:
We acknowledge completely that the commentary in the past period of time has caused a lot of upset for customers and the wider public. Deputy Doherty referred to many people contacting him. Many people with whom we have worked with in good faith over the years have contacted us, so it has caused a lot of heartbreak hence our appearance today, for which we are grateful.
The Deputy said the public wants to know whether we have a special deals arrangement. We do not. We deal with every case consistently and fairly. We have a governing set of policies that are reviewed internally right up to the board. We have a regulator who quite correctly monitors our activity and various lines of defences. I can tell the Deputy categorically that there are no special deals for special individuals coming to AIB. I apologise to our customers who have been put through that torture over the past week or ten days where they have been made feel that they have been subject to something that does not happen for a wider group. I can assure the Deputy that this is not the case.
Pearse Doherty (Donegal, Sinn Fein)
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One of the things they asked the committee to do was to write to AIB requesting information on how many debts above 90% have been cancelled. In other words, how many people outside of bankruptcy and insolvency had more than 90% of their loan written off. In fairness to AIB, it has provided this information. Over 90% of a loan is a sizeable amount. Mr. O'Keeffe told us it involves about 1,900 people. Can he tell us how many of those loans were over €1 million?
Pearse Doherty (Donegal, Sinn Fein)
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Most of them are over that level.
Pearse Doherty (Donegal, Sinn Fein)
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AIB is here for that particular reason. The public is demanding to know the special arrangements it is worried about that may be in AIB. It is a fair question. The bank is still mainly owned by the State. Are the majority of loans that are being written off by 90% above €1 million? I suspect they are.
Pearse Doherty (Donegal, Sinn Fein)
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Can Mr. O'Keeffe give us the figure?
Mr. Jim O'Keeffe:
As I said, we disclose overall the amount we write off in our annual financial statements. As the Deputy knows, we are before that next week but we felt it was better to come before the committee as quickly as possible regarding this item. The key assurance I can give the Deputy is that any of those 1,900 loans, regardless of whether they involved €1 million, €2 million €3 million or €4 million were subject to the same consistent policy application. There were no special deals involving those 1,900 loans.
Pearse Doherty (Donegal, Sinn Fein)
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Will AIB provide the committee with the information on how many of those 1,900 loans that were written off to the value of over 90% were above €1 million?
Pearse Doherty (Donegal, Sinn Fein)
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Yes.
Mr. O'Keeffe said that when AIB enters into arrangements, people must enter into them with honesty and good faith, which I accept. He said that AIB decides on the write off based on a set number of criteria, including what he said was the individual maintaining a reasonable and benchmarked lifestyle. Is that the same lifestyle for all of us?
Pearse Doherty (Donegal, Sinn Fein)
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So to clarify, we will not find a situation where the guidelines of the Insolvency Service of Ireland, which has benchmarked lifestyle cost-of-living reasonable expenses, are not applied in all of AIB's agreements.
Pearse Doherty (Donegal, Sinn Fein)
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Is it not the case that there are special conditions in that benchmark? The special conditions could be that you could be caring for an elderly parent in your house or you could be a very vulnerable person with a rare disease or in an end-of-life situation. How does AIB ensure that the information provided to it to allow for those special conditions, which mean that AIB allows the person a higher living expense and therefore gives him or her a bigger write-down, is true?
Ms Paula Duffy:
Reasonable living expenses are capped. The information is provided on the basis of a standard financial statement for mortgage customers and a sworn statement of affairs for other SME or non-personal debt. On that basis, we do additional checks in terms of property searches and the use of the central credit register to validate and substantiate that. All documentation is supported by independent documentation, so in the case of PAYE, we would have pay slips and prevailing tax, while for self-employed, we would have accountant verification.
Pearse Doherty (Donegal, Sinn Fein)
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I have made many representations to AIB in the past. I have represented people whose houses were being repossessed who were at the end stage of cancer. We reached out to AIB and in fairness, AIB might have paused in terms of sending letters at certain points in time. A property search is easy enough if you are able to determine an asset but for individuals who have come to me or other individuals who are in debt settlement arrangements with AIB, how does AIB ensure that the information they are providing is correct? If AIB determined at some point in the future that the information was not correct, what comeback does it have regarding the debt settlement it entered into?
Ms Paula Duffy:
In respect of specific medical conditions, we substantiate with medical reports to validate the particular conditions. We have a windfall clause incorporated as part of our debt arrangements, which provides protection in the event that there is a windfall or there is something we can unwind.
Pearse Doherty (Donegal, Sinn Fein)
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Let us look at windfalls. Does a windfall clause operate for a set period for all debt settlements?
Pearse Doherty (Donegal, Sinn Fein)
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So it is the same period for every single one. What is that?
Pearse Doherty (Donegal, Sinn Fein)
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It applies based on somebody getting a windfall such as money won on the horses, won the lotto, inherited money or received a loan from somebody, that money is AIB's. Is that the way it works?
Pearse Doherty (Donegal, Sinn Fein)
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The clause lasts for five years. What happens after the five years if the bank became aware that somebody did win the lotto, won money on the horses or came into a windfall but did not disclose it to the bank after the end of the clause date?
Is there recourse in relation to that?
Pearse Doherty (Donegal, Sinn Fein)
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I am talking about a case where, during that period, the borrower won the lotto, won money on the horses, inherited from an uncle or whomever but did not disclose it to AIB.
Pearse Doherty (Donegal, Sinn Fein)
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After the clause period is over.
Pearse Doherty (Donegal, Sinn Fein)
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That would be because it is a contract and it would be a breach of contract.
Pearse Doherty (Donegal, Sinn Fein)
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In relation to debt settlement arrangements that AIB has made, has that ever been an issue? Do people try to hide windfalls?
Mr. Jim O'Keeffe:
I will refer to Ms Duffy's comment on windfalls because that is less of an issue. In actual fact, the biggest issue is borrowers trying to put assets and earnings beyond us during the agreement of the restructure. That is probably the biggest challenge we have. In relation to windfalls, to be fair, clauses have been put in there for good order in the past but it is not something that we have had an issue with over the years.
Pearse Doherty (Donegal, Sinn Fein)
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I have one final question, which is very personal to me in terms of the community I represent. It is an issue that I hear about all the time. Many people who do not live in Donegal think the issue with mica is over. In the last number of weeks, we have seen bulldozers come in and tumble houses and family homes. People are away renting in different communities as a result. There are still mortgages out on those family homes. How does AIB explain to an individual that they have to pay a mortgage for what is now rubble where their family home once was, yet the bank is willing to write off millions of euro for other individuals?
Mr. Jim O'Keeffe:
I will cover the mica issue clearly. With the talk over the past week, the writing-off of debt has become almost a prize for somebody to achieve. When we write off debt, at that point in time we have minimised the income and the situation of the borrower as we have just described. We are not in the old world of somebody landing into the bank and saying they owe us X and they are going to cut a deal and we can halve it, etc. That is not how we operate. Obviously, I am not talking about specific cases but when people look at us today - this is really important - and ask how those write-offs take place, it is all done on the basis of affordability, etc. The residual situation for the borrower is consistent based on what we have just discussed.
In relation to mica, we have had very limited contact from borrowers to date. I would say that we have engaged with around ten to 12 borrowers on it. I know we have discussed it before on a case-by-case basis. Certainly, we are reaching out. We have set up a unit internally to work with the borrowers. Obviously, we are waiting to see how the scheme fully plays out, etc. I recently spent time in the Deputy's constituency with the team there learning from the understanding of my colleagues on the ground who are very close to it. We are very keen to engage the borrowers there. I cannot say that there is a blanket solution for everybody, but certainly we will be very accommodating and supportive.
Peadar Tóibín (Meath West, Aontú)
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Míle buíochas leis na finnéithe as teacht anseo agus as a gcur i láthair. Debt is probably one of the toughest things that a person can ever deal with. It is a disaster. It can lead people into depression and worse. It can radically alter a person's family circumstances and how their family lives. I have dealt with around 400 families in debt distress over the years and have tried to help them to seek resolutions with the banks over that period of time. The level of forensic investigation of their incomes and expenditures is high. The financial statements that people have to go through and the cuts they have to make, including cutting back on health insurance and different elements of their lives, are very significant. It is very seldom that any write-down is considered. There is usually a pause, a reduction for a period, an extension of the loan, perhaps a parking of the loan if the borrower is very lucky or a mortgage-to-rent deal. That is typically what most people will have experienced. When they see volumes of money of this size being written down, we can imagine, given their experiences, the anger and frustration that can create, first and foremost.
For us, fairness and prudence are key. It is necessary that banks, especially banks that have been injected with significant amounts of public funding and in which the State has a shareholding, are operating in a fair and prudent fashion. There is nearly more of a responsibility for those types of banks to fulfil those two objectives than others. The purpose of this conversation is to try to ascertain whether AIB's practices are fair and prudent. We will need information to be able to make that judgment if we can.
Deputy Doherty mentioned the 1,900 write-downs. That amounts to 1% of financially struggling customers. By definition, they are outliers in relation to the experience of people receiving resolutions of some sort with the banks. The amounts of money are equivalent to lotto wins in many ways. They are massive chunks of money. It is important for us to be able to understand the total value of those 1,900 write-downs. I know the witnesses have refused to tell us the average, but I am asking about the total amount. It could be that €2 billion was written down in that 1% cohort. If that is the case, it raises a serious question in relation to the prudence of that particular bank. Can the witnesses give us the total amount of the 1,900 write-downs?
Mr. Jim O'Keeffe:
On the policies, I will revert to the Deputy to give assurance around the process. I will share some more detail around how we operate and how it works to achieve that consistency so that the Deputy can comment on the matter. I agreed that I would take away Deputy Doherty's request for further financial information. As I said, we disclose the total write-offs in our annual financial statements. We are right up to the wire on that at the moment. I will take that away under consideration and come back to the committee.
Peadar Tóibín (Meath West, Aontú)
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To what period of time does the 1,900 figure relate?
Peadar Tóibín (Meath West, Aontú)
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Mr. O'Keeffe mentioned that AIB has a number of mechanisms for checking the validity of each of the write-downs, one of which is the board, which has a look at some of them. There is a public interest director on the board. Would he or she be made aware of the size of some of these write-downs?
Mr. Jim O'Keeffe:
Just to explain, as the Deputy has said, we have a dual role, of which the committee and the Chairman will be aware. The bank remains ever grateful for the injection of money that was put into it to support our customers at a very difficult period of time. As I said, we recognise that we started off with €30 billion of debt in non-performing exposures. There were two pieces which the Deputy correctly highlighted, in that we needed to deal with that debt from a prudential point of view but also from a customer point of view. To do that, the board has very clear oversight of the strategy and treatments that we provide for borrowers. Obviously, not every case will go all the way to the board of the bank. The Deputy mentioned mortgage-to-rent. We take a very significant debt write-down on a mortgage-to-rent deal as the ownership moves over to make that viable for the mortgage-to-rent entity that is buying the product.
Peadar Tóibín (Meath West, Aontú)
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Is there a threshold by which a particular case, a number of cases or at least a policy is brought to the board for an understanding or a decision?
Mr. Jim O'Keeffe:
What happens then is that the strategy is agreed and there is a set of detailed policies on how it is going to work, the thresholds, who can sign off and all of that. For what we are dealing with, we need that kind of guard-rail. When we are making decisions on a daily basis, we are not making arbitrary random decisions or reassessing against it. We are making those decisions against a series of policies. We have policies on forbearance and write-offs, etc., that case managers have to review and make sure they are abiding by.
The case manager then fills out a detailed template. The Deputy mentioned a standard financial statement as an example. We would have that type of template across the business for them to fill out.
Peadar Tóibín (Meath West, Aontú)
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I am informed that there are three layers of checks in respect of each of these write-downs. I understand there is a board. I also understand that public interest directors are nominated by the Department of Finance. I am trying to work out if that information goes back to the Department of Finance. Does the Minister know about write-downs of this size? What is the influence of the board of directors on the direction of the bank in respect of that policy?
Mr. Jim O'Keeffe:
The board of directors, which includes the nominated directors, has influence at the very outset when we set the strategy, which we refine on the basis of how it evolves. The board also has oversight of policies. There is a strong flow of information back up as to how those policies are performing. The board also gets the outcome of internal and external reviews to give it comfort that we are abiding by the rules of the policies. If, for example, there were any breaches of any of those items, that would be reported to the board. It gets-----
Peadar Tóibín (Meath West, Aontú)
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The board would not know about the individual cases.
Peadar Tóibín (Meath West, Aontú)
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I will move on to the credit risk function, which is a particular function that checks these write-downs. Is there a threshold that is reached when information is passed to the risk function? Do those staff members take a percentage or a random sample? How do they work out what to check? How many write-downs are refused? In how many cases do those with a credit risk function say the bank made a wrong a decision and a particular write-down should not happen?
Mr. Jim O'Keeffe:
The types of cases we are talking about involve a dual piece. We would call it "the business", for the lack of a better term. The case manager would fill out the proposal and recommend it before the decision. When I am talking about reporting that is going to the board, etc., the credit risk function in the type of cases we are talking about will adjudicate before a decision is made. There are two lines involved. Depending on the framework, that may actually go to a committee for a decision. That committee will be made up of credit and customer-facing people, and will primarily be chaired by the risk function. The risk function is still within the bank and sits within the chief risk officer's world, which is defined under regulation as a preapproved control function, PCF, with very specific independent authority in that regard. Before the decision is made in the types of cases we are talking about, there is a dual piece.
Peadar Tóibín (Meath West, Aontú)
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No audit is done afterwards.
Peadar Tóibín (Meath West, Aontú)
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Is there any information about how many of those audits turn out negative? As in, where a decision is made and it is considered the wrong decision.
Peadar Tóibín (Meath West, Aontú)
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I appreciate that.
Mr. Jim O'Keeffe:
There is back and forth. If there was a case where there were queries as to why we went to that particular route, it could come out of a review. Have I seen anything systemic or any issues in that regard? Have I see anything whereby a write-down was the result of a deal or favour? I have not.
Peadar Tóibín (Meath West, Aontú)
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Does the bank collate any socioeconomic data on the individuals who get write-downs? Has the bank any mechanism to be able to analyse if there are patterns in respect of people who get high levels of write-down and people who get no write-down or who are squeezed for the last cent owing according to their contracts? Is any analysis done afterwards to see are there any patterns? We are all human beings and people sitting in front of certain others will behave in a certain way. Some people will be influential and will have the power to bring others along with them. Other people might have less education. Those from a lower socioeconomic background may have less individual power. Is there any analysis to ensure that is not an element of the process in the bank?
Peadar Tóibín (Meath West, Aontú)
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I mentioned the socioeconomic data of the borrower in that scenario. Are those data collected?
Peadar Tóibín (Meath West, Aontú)
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I am, as well as their profession and income.
Peadar Tóibín (Meath West, Aontú)
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There is an element of that. There is no doubt in my mind that these transactions are carried out by human beings. These write-downs are delivered by human beings and we are all susceptible to different elements of individuals who stand before us. If a person has celebrity, political power or great influence in the community, those things can have an influence. I am trying to work out if there is a mechanism whereby the bank can proof against that.
Ms Paula Duffy:
The dual sign-off eliminates that consideration. It is the person collating the information who makes a case and there is then a second review and challenge. As Mr. O'Keeffe said, there is an over and back, and a challenge. It offers mitigation, to a degree. First-line sampling is also layered over it in the business. Second-line review occurs and there is also an external audit.
In terms of the loop-back, certainly employment would be a consideration in terms of a risk appetite for new lending. That would form part of risk appetite in that space.
Mr. Jim O'Keeffe:
At an overall level, and we sometimes do not bring out this point strongly enough, our objective was to protect families and homes from the very beginning. The committee will see that was the thread running right through this. There was no concept or bias within the organisation or its culture to want to sort out preferred individuals. The culture was around wanting to help people who were in homes and were in difficulty. That is something we in the team have prided ourselves on as we have brought through the process. Any sign of a conflict is managed carefully.
Peadar Tóibín (Meath West, Aontú)
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Could Mr. O'Keeffe break down the 1,900 customers who received the significant 90% write-downs? How many were developers? How many were builders? How many were businesspeople? How many were farmers? How many were ordinary people who bought a couple of houses that were overpriced?
Peadar Tóibín (Meath West, Aontú)
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Could the committee get such a breakdown?
Peadar Tóibín (Meath West, Aontú)
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I imagine it is skewed towards developers and people in that scenario, rather than Joe Soaps who have bought two or three properties.
Peadar Tóibín (Meath West, Aontú)
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Many people's mortgages were shifted to vulture funds or investment funds. Many of them are now paying exorbitant interest rates of 7%, which will shortly rise to 7.5%. Such interest rates can add up to €5,000 more to the annual repayments relating to a mortgage than would have been the case with those people's original banks. In banking in general, why would some people be shifted to a vulture fund, for such a fund to chase down a debt over a period of ten or 15 years? Why was that decision made as opposed to crystallising the write-down with an individual at a particular time?
Mr. Jim O'Keeffe:
It comes down to engagement. The sale on any of the loans we have on the private dwelling house side, and the same applies across the board, would only come after a sustained and lengthy period of trying to engage with the borrowers. We must have reached a point whereby we could not get the level of engagement to create a restructure.
We struggled as we went through them because some customers could sustain only very low levels of debt. They were engaging with us but they could sustain very little, and that is why, along with the Irish Mortgage Holders Organisation, we reinvigorated the mortgage-to-rent scheme, which proved very beneficial for us with that grouping. We carried out an extensive outreach campaign, as we mentioned in our document, to try to reach every borrower. We communicated strongly to the borrowers to say that if we could not get engagement or a solution, that would leave us in a position where we would have to sell the loans.
It was not that we did not try to find an alternative; rather, we could not get to solutions with the borrowers at that point. In the intervening time, when we look back at the €30 billion that was there, any of the loan sales we carried out were on the investment side, moving through buy-to-let properties and so on, before we moved on to family homes.
Bernard Durkan (Kildare North, Fine Gael)
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Like other members, I have represented various borrowers over many years. I have been in and out of various banks, including AIB, over many years. I have been in and out of every court in the country except one, the Supreme Court, which I have no wish to go to and should not have to go.
How many repossessions has the bank carried out against ordinary householders, by whom I mean persons who have a family home, and to what extent did the bank try to accommodate such people? I accept the witnesses indicated a lack of engagement has been an issue, although that was not an issue in any of the cases I have dealt with.
Bernard Durkan (Kildare North, Fine Gael)
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That is a good answer.
Bernard Durkan (Kildare North, Fine Gael)
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Is Mr. O'Keeffe saying the bank has granted mortgage-to-rent on other properties?
Bernard Durkan (Kildare North, Fine Gael)
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What is the ultimate conclusion for those mortgage-to-rent properties? After a given number of years, will the property revert to the bank or some other institution? Has that been envisaged?
Mr. Jim O'Keeffe:
Ms Duffy might wish to come in here. There is a three-way agreement with the borrower between us and iCare, the body with which we have partnered alongside the IMHO. We agree with iCare that it will buy the loan and the borrower agrees to sell the loan to iCare. We agree a specific write-down based on several criteria and we will end up writing down the debt to ensure the borrower can stay in their home. iCare then enters into an arrangement with the borrower and the local council. The property will never revert to us.
Bernard Durkan (Kildare North, Fine Gael)
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Will it revert to iCare or some other body that intervenes on behalf of the borrower?
Bernard Durkan (Kildare North, Fine Gael)
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That is not such a good outcome.
Mr. Jim O'Keeffe:
I might just walk us through what happens. Typically, these borrowers can sustain a tiny or no level of debt. Assuming the house is appropriate for mortgage-to-rent, this allows them to stay in the house, albeit as a rented property, and nobody in their community needs to know what has happened for them. It is a way of them preserving dignity where there is no other sustainable outcome.
Bernard Durkan (Kildare North, Fine Gael)
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I am familiar with the process, but what happens after the borrower dies and the debt has to be dealt with? What chances do the family have, or are they even given an opportunity, to redeem the loan? Does the bank give them an opportunity to redeem the loan?
Bernard Durkan (Kildare North, Fine Gael)
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In that case, the financial institution that undertakes the responsibility for the debt will gain because it will now own the property.
Mr. Jim O'Keeffe:
No, we will have sold the property. The borrower cannot afford any level of the debt, in the first instance. We will have agreed, with the borrower's consent, that another organisation, such as iCare in the example I am using, will buy the loan. We will write down the loan to the appropriate level and there are guidelines, policies and so on for that. That will allow the borrower to continue to live in the house but, obviously, the property will remain part of the iCare institution. The alternative to that is that, typically, the borrower would lose the house.
Bernard Durkan (Kildare North, Fine Gael)
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That may or may not be the case. Mr. O'Keeffe mentioned full disclosure. How does the bank determine full disclosure? Does it go to court? Does it use legal procedures? How does it know whether a person in a different position, perhaps with large borrowings, who might be asked by the bank about his or her liabilities and assets, is telling the truth?
Ms Paula Duffy:
In the identification of assets and liabilities, we use a statement of affairs, which is completed by the borrower and sworn by a peace commissioner, a commissioner for oaths or, in some cases, a solicitor. We substantiate that with information from an accountant or whatever additional information might support it. As for properties, we use external company search data, property search and the central credit register to validate the level of debt.
In summary, there is upfront disclosure from the customer and we substantiate that by using available third-party information.
Bernard Durkan (Kildare North, Fine Gael)
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One thing I have found frustrating in the individual cases I have dealt with is that, having done everything possible to reach an accommodation, usually based on a fair assessment of the circumstances and involving some pain for the borrower, he or she will then read somewhere, or get some information to the effect, that somebody else has received a total write-down. Such a borrower will automatically ask me why he or she did not also get a total write-down, given he or she is the same as anybody else, having paid the penalties arising from the financial crash. How does the bank manage that? For instance, if there are no assets on a loan and there are no ways or means of a collection being made, that is considered an uncollectable debt, but why is it portrayed as being a write-down when the debt is uncollectable in any event? It makes life very difficult for those of us who try to make a case on behalf of small operators who feel they have a right to what they see as the same treatment as some of the bigger borrowers.
Bernard Durkan (Kildare North, Fine Gael)
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That is not true. My experience in this goes back a long way and includes dealing with AIB. I do not mind a bank saying what it does, provided it does that. I have been in front of staff from several banks where the cold eyes of the lending institution had one target only, namely, getting a hold of the property and putting it on the market as quickly as possible. That is my personal experience. I am not satisfied that what the witnesses have told me in that respect is in accordance with the facts.
I am not suggesting they are deviating from the truth. I am merely saying that in order to do the job I have to do, while remembering I have to do this along with many other jobs and I am only one person. I and my office staff have gone to countless ends with the banking system over the past number of years. I worked extraordinarily hard to set up alternatives to avoid and avert the repossession of the property of what are now called the ordinary people. It drives me up the wall when I, or my constituent, hear or read about a write-off of hundreds of thousands or millions of euro, whatever the case may be, in a particular instance, without the information being made available to the general public that this was an uncollectible debt, and that various efforts were made to collect the debt but it was uncollectible. By "uncollectible" I simply mean the assets of the collateral that were there originally are no longer in existence. By the way, the bank may already have repossessed the collateral; there is no reference to that at all. That collateral may have achieved a greater value than meets the eye in the intervening period.
I will make a last point. I agree with the concept of full and final settlement. I also believe that the credit rating of the person in the eye of the storm needs to be carefully looked after. In most cases, that person has spouses, families and so on and so forth. An individual's uncollectible debt may be written off and he or she will not have to pay anything but the person cannot borrow anything for five years or more, depending on what the case may be and, in some cases, longer than that. That creates a problem and a vision of unfairness people are very alert to. Two issues need to be dealt with. There needs to be an explanation as to what debt is written off. Is it an uncollectible debt? Is it residual debt? Of course, residual debt can pop up again in four or five years' time and become part of the debt. That is why I asked about full disclosure. If full disclosure has not been made or taken place, anything can happen in the next five, six or ten years. It is very important the general public get to know that the rules being applied are the same rules for everybody and that there is no suggestion anywhere of special deals for special people or preferential borrowers. I asked this question many times before. That situation undermines the kind of work we around this table try to do for our constituents who depend on us to stand up for them and say their piece. They do not get to say it too often.
I am a little uneasy. I have been watching this carefully. I have dealt with countless cases involving AIB so I am speaking from actual coalface experience. I am not saying the information the representatives gave is wrong. I am saying there is sometimes a tendency to read the script, which tells you what it tells you and nothing more. I will conclude because I must go to the House and am overdue. Suffice to say, it is essential the general public, when somebody is writing off a debt of hundreds of thousands, or multiples of that, is told and knows what is being written off. People come to me and say, "How did that guy get that kind of deal?", when theirs was only a small debt and minuscule in comparison with that. The public have to be told what is happening. A write-off of an uncollectible debt has to be clearly illustrated to the general public or else-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Barry-----
Bernard Durkan (Kildare North, Fine Gael)
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I think Mr. O'Keeffe wants to answer.
Mr. Jim O'Keeffe:
I will answer briefly. I completely agree with the point on the terminology around uncollectible debt and write-off. When we talk about write-off, and everything we talked about today, it is to indicate the policies and the way we go about it is that the debt is uncollectible, there are no further assets and there is no income to cover it etc. We refer to it as write-off but it is uncollectible debt. It is a very important point that it is uncollectible debt. This not some deal or anything being brought forward.
On the Deputy's experience, I am genuinely confident, based on all the work we do to make sure, there is consistency around this. I cannot talk for how the experience is outside AIB but I am very open to getting the examples where the Deputy feels we have not been consistent because that would certainly be very concerning from my perspective.
Bernard Durkan (Kildare North, Fine Gael)
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I will tell Mr. O'Keeffe about that on another occasion. I will not discuss it at committee. I raised another point regarding some of the total debt being discussed. There are situations where part of the assets have already been seized by the lending institution. In writing off a debt, the remainder of the debt is being written off because piecemeal resolution is not the way to go at all. It has to be full and final settlement from the word go. As Mr. O'Keeffe and I well know, you take what you can when it is given, and gradually take more and more until all the assets are taken. It is easy enough to write the debt off at that stage. Mr. O'Keeffe knows that.
Mick Barry (Cork North Central, Solidarity)
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I have a few questions to ask. Before I do so, I will make an observation. Two possible scenarios are playing out here. Both of them involve a bias against the majority of ordinary people and favour those with wealth in our society. In the first scenario, there is a public suspicion. Today, there is a bank opposition challenging the view that there is one rule for people who are wealthy or famous and another for the rest of us. If that were to be true, it is obviously completely wrong in every sense. I listened carefully to the arguments put forward by the representatives of AIB. If it is the case there is consistency right down the line, then there is still a bias against ordinary people. As the old saying goes, "If you owe €5,000 and you can't pay it back, you've got a problem. But if you owe €5 million and you can't pay it back, it is the bank that has the problem." Despite the fact no rules of engagement or laws are being broken and everything is being done according to the book, the little guy loses out to a greater extent than the bigger guy by virtue of the size of his or her debt. It may be the same percentage that is written down, but the sums are far greater. That is just an observation.
As I understand it, and I stand to be corrected, there have been 150,000 write-downs by the bank since 2015. Is that correct?
Mick Barry (Cork North Central, Solidarity)
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Solutions.
Mick Barry (Cork North Central, Solidarity)
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There have been 150,000 solutions and 1,900-----
Mick Barry (Cork North Central, Solidarity)
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It is approximately 1.3% of the total.
Mick Barry (Cork North Central, Solidarity)
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Okay. I am clear on that. I will not bring any particularly new information before the committee. I will pick up on points raised by Deputies Doherty and Tóibín. Deputy Doherty asked about the number of those 1,900 write-downs of 90% or more that were for people who owed €1 million or more, and Deputy Tóibín asked what the total amount of debt written down was.
Deputy Tóibín asked what was the total amount of debt written down and Mr. O'Keeffe made the argument that he will get back to him on that because AIB is down to the wire with its accounts. Are the accounts in question for the year 2022?
Mr. Jim O'Keeffe:
That was not my only argument. What I said was that we do not disclose that information today but we disclosed an overall number within our accounts in terms of debt write-down.
Deputy Doherty asked how many cases were worth over €1 million and Deputy Durkan asked for the total amount. I replied to them that we do not disclose it today, and I referenced the fact that our annual accounts are being announced next week, and I said that I just wanted to take the query away for consideration because it is not a number that we disclosed today.
Mick Barry (Cork North Central, Solidarity)
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It seems reasonable to me that as the 2022 accounts are down to the wire, the finalised data for 2022 would seem not to be available. I presume that the information for the period 2015-21 would and should be available both for the number of write-downs in cases worth more than €1 million, and the total amount for those years. Mr. O'Keeffe has said, "we do not disclose that information today." Why is that the case? Is it due to commercial sensitivity?
Mick Barry (Cork North Central, Solidarity)
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In which case, does it remain a commercial secret or is the information to be disclosed, or ever to be disclosed, to the public by a publicly-owned bank?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The information that has been requested relates to 2015 onwards and the information is already in the public domain. I think that Deputy Barry has said that AIB should have that information for the meeting today.
Mick Barry (Cork North Central, Solidarity)
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Yes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Barry understands that the figures for 2022 may not be available because of the accounts period of AIB. He is pressing AIB for historical information that is already in the public domain.
Mick Barry (Cork North Central, Solidarity)
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I thank the Cathaoirleach for the clarification and he is correct.
Mr. Jim O'Keeffe:
The overall level of write-down that the bank writes down, including the greater than 90% is a publicly disclosed number every year. It is a number that comes out every year.
The details on just the 1,900 cases is not disclosed. The committee requested that new information. We provided the information to give the members a sense of the scale of write-down for the cases that are more than 90%. We do not provide that subset within our financial results. Today, we do not provide the information and the figure does not appear in the results. I am not trying to generate it as a secret. The information is commercially sensitive because we have to look at what is the way that we operate our write-down policy, etc. so I need to take that away. That is why I said to Deputies Doherty and Durkan that I would take their queries away, under consideration, in terms of it and that was the purpose. I still believe that my colleagues and I can give the committee an assurance around the consistency of how we are applying it without that information today.
Mick Barry (Cork North Central, Solidarity)
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Yes, but I would still like to have the information and I will come back to this matter.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Deputy Barry left out the 1,900 cases and asked AIB how much was written down in the years 2015-18. AIB can give him that figure because it is in the accounts. Please give him those figures.
Mick Barry (Cork North Central, Solidarity)
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That was the first part of my question.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Deputy is trying to be helpful.
Mick Barry (Cork North Central, Solidarity)
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The information is out there. As AIB will be aware, I did not collate the information. What is the total write-down for the years 2015-21?
Mick Barry (Cork North Central, Solidarity)
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Yes.
Mr. Jim O'Keeffe:
The total is €3.5 billion and I will put that significant number in context. Over the past week or ten days the external world has become complicated for all of us but let us consider that we started out with debt of €30 billion and a key part of it was to enable the bank to make sure that we were able to help customers move on with their financial lives.
Mick Barry (Cork North Central, Solidarity)
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I think Mr. O'Keeffe was going to say it was a huge number but, yes, it is a significant number.
The second part of my question was on the subset of 1,900 cases, which is not disclosed today. Is it not disclosed today because the matter is commercially sensitive or the bank has not calculated the total for the subset as of yet? To me, the latter would seem strange given that there has been so much public commentary about the 1,900 cases over the last week. Please explain the bank's position.
Mr. Jim O'Keeffe:
Of course the bank has calculated the details that sit behind all of these numbers. In fairness, we only released the 1,900 detail to this committee as of Tuesday evening. As part of that, we feel that we complied with the request of the committee in sharing that information and we were not asked for the financial number that sits alongside it. As I said to the other two Deputies, there is a commercial sensitivity around it that I need to take consideration on before I can share the number with the committee. Again, I do not believe that such a situation takes us away from the key point that we should be still able to give the committee absolute assurance that there is a consistency in terms of how these loans are dealt with across the board.
Mick Barry (Cork North Central, Solidarity)
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For the record, I believe that the information should be given to the committee today as to what is the total sum for the 90%. The bank has the figure, the bank is a publicly-owned bank yet it has chosen not to disclose the information to the committee today and I feel that it should disclose. I hear what Mr. O'Keeffe has said about the bank giving serious consideration to disclosing the information after the committee proceedings and I add my voice to the voices of the other Deputies in calling for that to be done. The number of 90% write-downs for those who owed €1 million or more should be provided as part of that.
Some interesting issues were raised about the socioeconomic profile of those who have received 90% plus write-downs. Deputy Tóibín asked for a breakdown of the figure in terms whether the people were developers, farmers or workers who had lost their jobs, which is a job that was referred to, etc. Again, that information is available to the bank but Mr. O'Keeffe feels that for reasons of commercial sensitivity that there may be an issue with disclosing the information today. I do not see how such information is commercially sensitive so can he please explain.
Mr. Jim O'Keeffe:
I said to the Deputy that I did not have the exact breakdown in front of me, knew that it was spread across those different categories and I would take his request away but get back to him. I dealt with the matter in a separate way. We were not asked for the information in advance of this committee meeting.
Mick Barry (Cork North Central, Solidarity)
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I know. The whole public speculation for the last ten days has been on whether there is one rule for higher socioeconomic categories and another rule for people who are not. A breakdown between the categories of developers, farmers and workers who have lost their jobs, etc. is available to the bank but that data has not been brought to this meeting. I believe that the information should have been brought to this meeting. Does Mr. O'Keeffe agree with me?
Mr. Jim O'Keeffe:
We were asked to come to this meeting at short notice, which we were very happy to do. We were asked for a specific set of numbers, which we provided to the committee. We have never failed to provide to the committee data that was requested in advance. It is difficult to respond to all data requests within the committee because, obviously, I must make sure that the data has been validated internally because, as the Deputy will know already looking at the 1,900 number, that such detail goes into public discourse immediately and generates a lot of discussion and speculation.
If, therefore, I were to release to the committee any numbers I had not validated completely, I would be concerned that I could create the wrong outcome. That is the only reason.
Mick Barry (Cork North Central, Solidarity)
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All I will say in response is that I think it would be useful and would assist the discourse around this subject if that breakdown could be provided within a reasonably short period. It does not have to be tomorrow.
Aidan Davitt (Fianna Fail)
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I thank the chairman and his team for having come here today. As you will know, Chair, lots of times we have requested various institutions to come before us and they have dragged their heels, so I respect AIB's quick response in coming before us.
There has been great fanfare around the 1,900 people and the 90% write-down, as has rightly been discussed today. The matter has had a good hearing. Like Deputy Doherty, I have dealt with AIB on a number of occasions when representing various people and have always found its staff quite reasonable. I might not always get the results I would like, but my experience has been that the facts behind the customers and their ability to pay ended up being taken into account. It has always been a black-and-white process based on my dealings.
Looking beyond the 1,900 figure, there are, as was said, a whole lot of different processes. Deputy Durkan talked about the scheme whereby people voluntarily give up the house and rent it back, the other schemes whereby loans are mothballed, shared or split and all the different types of settlements. Mr. O'Keeffe mentioned a figure of 150,000. Can he give us a better flavour as to how they are broken down or the categories in that regard? He said there were 300 on the voluntary rent-back scheme. Could he give me a breakdown of those 150,000 settlements or agreements the bank has?
Ms Paula Duffy:
Certainly. I cannot drill into the component parts but I will give a sense of how the 150,000 is comprised. On the mortgage side, we have a stabilisation period for some people, whereby they have a short period of interest-only payments. Then, in the longer term, there can be term extensions or capitalisation of the arrears with some element of term extension. Our split product, which the Senator mentioned, has an upfront ability-to-pay element. We compromise on an element and we have a stretch element so, in the event that circumstances improve, the customer has the ability to absorb that.
On the wider front - and we touched on this as part of the opening statement - we have positive equity sustainable solutions, which are included in the numbers, and a low fixed-rate product so the customer is afforded the opportunity to pay a low rate over a three-year or six-year period.
Outside of that, for bigger SME-type borrowers, our primary objective was to ensure that the viability of the business was maintained. In that scenario the debt was right-sized and there was an element of compromise based on some element of performance over a period. That is probably the widest encapsulation as to what the 150,000 includes.
Aidan Davitt (Fianna Fail)
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Do the witnesses have a rough breakdown as to where those 150,000 would fall in respect of those categories? Would it be a quarter, a quarter and a quarter? I am just curious.
Aidan Davitt (Fianna Fail)
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Thank you, Chair. I am happy with that.
Marie Sherlock (Labour)
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Thank you, Chair, for putting on this additional session today the committee. I thank AIB and Mr. O'Keeffe and his team for coming here. The reason this hearing is so important is that AIB remains a bank with a majority State stake and we, as the State and as taxpayers, have little or no transparency as to the type or scale of write-downs it offers to its customers. We heard very clearly Mr. O'Keeffe say early in the meeting that there are no special deals for special customers. How many of the eight family home repossessions were in the 90% debt write-down category?
Mr. Jim O'Keeffe:
I do not think I can answer as to whether the eight repossessions fell into the 90% category in that regard, but if the Senator is concerned as to whether family homes form part of the 1,900, they do. Eight family homes since 2017, notwithstanding the fact that it is still eight homes, in the context of our having done 300 mortgage-to-rents, is-----
Marie Sherlock (Labour)
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I appreciate that, and I do not mean to interrupt, but, clearly, if somebody's home has been repossessed and he or she still owes more than 10% to the bank, while others are getting to hold onto their homes and having 90% of their debt written off, that is a very stark picture. I would think that the eight situations are probably burnt into their brains. They should be in that the repossession of any family home is an enormously serious matter and, therefore, we would like to hear the detail as to whether the eight had the 90% written off.
Marie Sherlock (Labour)
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Yes, I appreciate that.
Mr. Jim O'Keeffe:
By definition, therefore, if there were eight repossessions, each one of them, because of the value of the property, would most likely not come into the 90% write-off because it is unlikely that those eight properties had got down to less than 10% value. To respond to the Senator's wider question, which is that if those eight repossessions had taken place, and if there was a residual debt and we were then talking about the write-off of the residual debt or, as Deputy Durkan referred to it, the uncollectable debt, there is every possibility that this was either fully written down or certainly written down to a very small residual. I expect that if we just think about the circumstances in which those households found themselves, if they were not able to repay the debt. In some cases it is not a very arduous process. They may have worked with the bank even for that repossession because of the nature of some of the legal issues people face. Therefore, when I say there were eight, they took that shape. I expect that it is very likely that the residual debt was completely written off. I do not think that would be an unreasonable position to take on it.
Marie Sherlock (Labour)
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I echo the calls made earlier in respect of the profile of the 1,900 and whether they are for the most part people with multiple assets or whether they are just ordinary mortgage holders. The public very much needs to understand that profile, and we look forward to the detail the witnesses will furnish to the committee.
Mr. O'Keeffe has spoken about policies being consistently applied. I want to understand a little more about the banks' policy on the write-down process, particularly AIB's own write-down process, and then the personal insolvency process. Some people feel they are forced to go down the personal insolvency route and then others are offered a write-down by the bank. We can see the benefits for both the bank and the individual if the bank just writes down the debt itself. Then it becomes public, it is not on a register, there is no judicial oversight and, of course, there is a lack of transparency for shareholders because it does not appear on the register and the bank can effectively hide the type of write-down it has engaged in with the individual. Of course, for the individuals, there is a greater privacy for them than if they go down the personal insolvency route. Why, then, when the personal insolvency route and regime are in place, does the bank persist in having that informal debt write-down process?
How actively does AIB encourage debtors to go through the personal insolvency process? Are there some people to whom it just offers debt write-downs?
Mr. Jim O'Keeffe:
If we step back from this for a moment, in the traditional world of banking when you got to a situation where you were not able to recover debt, you went down the legal route. You would have typically sought the court to support the recovery of that. When the bank was gifted the bail-out in order to support customers through that period, the focus was on trying to move everybody forward at a greater pace to support that. That was the real request of the banks. The Keane report, which put forward solutions, then came out. A huge amount of work was done at the regulatory and industry levels to put solutions in place that were different from what went before, so we could move things along. As a result, the bank put in place policies, strategies and treatments for customers that would allow us to deal with that debt and move it along in the knowledge that if we went to personal insolvency, which did not exist in the initial phases, or to the courts, we would not get a better outcome in any event. That was the reason we put them in place. Our action has resulted in 150,000 customers having sustainable solutions today. When customers differ with us, it may be because of debts they have with other institutions. That can often be some of the reason they go for personal insolvency arrangements. When they go to that, we are not against that and nor do we punish the borrower for that in any shape or fashion. The Senator will see from our numbers that we have done 4,300 personal insolvency arrangements. We would be viewed as being very strong in terms of supporting decisions within the personal insolvency function. I do not see these as either-or solutions. Some borrowers need the comfort of being able to say that they do not think they are getting a good deal with the bank and want proof that they are, and so they go through the personal insolvency process. I see it as a continuum. It is not that we are against it. We engage proactively with the personal insolvency process in order that people can also deal with their wider debt.
Marie Sherlock (Labour)
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Do the witnesses accept that there is a perspective that people with much smaller debts feel they have to get the protection of the personal insolvency process, while those with much larger debts can individually negotiate with the bank and get an individual write-down? Do they accept that this perspective is out there?
Marie Sherlock (Labour)
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What is the bank's policy on working with unregulated financial negotiators or intermediaries, particularly in the context of non-personal insolvency situations? I think the latter is the best way to define them. Does AIB engage with unregulated negotiators on behalf of the lender? What is the bank's policy in this regard?
Mr. Jim O'Keeffe:
Deputy Tóibín spoke about the stress and anguish borrowers can experience. From our long years of dealing with this matter, we know that it is dreadfully tough on customers. The Senator categorised these advisers as non-regulated. Anybody listening will probably say that sounds as if there is something wrong with these third parties. However, very often borrowers may nominate somebody they trust to engage on their behalf with the bank. We talk all the time about engagement. If a borrower decides that they are going to trust somebody else to engage with us, it is important that we at least engage with them at that level. We have seen good outcomes from that because we can engage with the borrower on that basis.
Ms Paula Duffy:
The third-party adviser role is a conduit for the engagement piece. It does not negate our responsibility to validate or substantiate what has been submitted on behalf of the borrower; it is just a conduit for the engagement piece. It affords the borrower the opportunity to be a little distanced from the emotive elements of the debt resolution.
Marie Sherlock (Labour)
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I appreciate that, but a market has now developed in the context of what I might call unregulated financial advisers. The latter attempt to mediate with banks regarding debt and to negotiate individual write-downs. I am very concerned that AIB, as a regulated entity, would engage with any unregulated entity in that write-down process.
Mr. Jim O'Keeffe:
It is a difficult balance to strike. We are obviously very careful with the credentials of the individuals, whatever form they come forward to us in. We have experience of dealing with these entities in the past and making sure they are not extracting the wrong outcome for the borrower. As part of our due diligence in terms of the outcome for the borrower, we have clear sight over fees and everything that has been paid. That is important. We should all reflect on what might happen if the banks began to say we will not engage with third parties or trusted advisers for borrowers, who may sometimes operate in just two or three cases, or maybe more. In our experience over the years, third-party advisers have helped borrowers from a mental health and well-being point of view. If we are alluding here to a small group that can cause difficulty for borrowers, we are very alert to that type of activity. To be fair, however, I would not like to cast a shadow on all those third-party advisers. We have found them to be good over the years. There are a lot of genuine people who come forward and work with borrowers.
Robert Troy (Longford-Westmeath, Fianna Fail)
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I thank the Cathaoirleach for allowing me to contribute. I am not a member of this committee. I appreciate it. I, too, acknowledge our witnesses coming before us today to answer questions. As a previous speaker indicated, not everybody comes willingly before committees. Some might say the witnesses came here fast because they wanted to come in before the end-of-year announcements so they could have something to hide behind in terms of any answers they did not wish to give. It is a cynical person who thinks that.
I have a number of questions. The 150,000 solutions were between 2015 and 2021. Is that right?
Robert Troy (Longford-Westmeath, Fianna Fail)
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From 2013 to 2021. The total amount involved is €3.5 billion.
Robert Troy (Longford-Westmeath, Fianna Fail)
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That is a breakdown of restructures, write-downs, split mortgages and mortgage-to-rent arrangements.
Robert Troy (Longford-Westmeath, Fianna Fail)
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Within that, the €3.5 billion is where the write-downs are included.
Mr. Jim O'Keeffe:
Yes. There may be elements in the write-down that included legal cases, etc., whereby we had to write off debt. That is the only thing that would be excluded from the 150,000. The 150,000 are solutions that the customers continued with. There would be an element of the debt write-off, which was part of a legal process whereby we had to write off residual debt.
Robert Troy (Longford-Westmeath, Fianna Fail)
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The €3.5 billion that has been written down is included in those figures.
Robert Troy (Longford-Westmeath, Fianna Fail)
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Did the 1,900 people who received 90% write-downs get them during that period or was that just last year?
Robert Troy (Longford-Westmeath, Fianna Fail)
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There were 4,300 who received further write-downs.
Robert Troy (Longford-Westmeath, Fianna Fail)
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The 4,300 is not just people who negotiated write-downs.
Robert Troy (Longford-Westmeath, Fianna Fail)
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Do the witnesses have a breakdown of the percentage of write-down achieved in those cases?
Did they achieve a write-down of 20%, 30% or 50%? Mr. O'Keeffe seems to be able to speak specifically and I accept what he said earlier, in that the figure was requested of him. He may need to come back to us with the figure. What percentage of a write-down did each of those 4,300 achieve?
Robert Troy (Longford-Westmeath, Fianna Fail)
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Of that 4,300.
Robert Troy (Longford-Westmeath, Fianna Fail)
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Of the 150,000 customers, Mr. O'Keeffe said 63,000 of those were mortgages. Is that correct? I accept it may not be in the remit of the witnesses today to do so, but will they break down how many of those 63,000 were mortgage-to-rent? The witnesses alluded to 300, but that may be one particular year and it might not be the aggregate figure. Will the witnesses come back with clear figures on how many of the 63,000 were mortgage-to-rent, how many were split mortgage and how many were interest only?
Robert Troy (Longford-Westmeath, Fianna Fail)
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With regard to the 50,000 of restructuring, does AIB include the sale of a loan to a vulture fund, as part of the restructuring?
Robert Troy (Longford-Westmeath, Fianna Fail)
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How many loans has AIB sold to vulture funds?
Robert Troy (Longford-Westmeath, Fianna Fail)
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Were all of those non-performing loans?
Mr. Jim O'Keeffe:
Yes, they were. There are two categories within that. We went through an extensive period of engagement and all the various solutions we talked about, including the fact that we reinvigorated the mortgage-to-rent piece. For a long number of years, we created a number of solutions. We had a programme of engagement with the borrowers and, at the end of that, we had a group of customers who were not engaging so as to allow us to agree solutions with them. Those cases were sold on. They make up the vast majority.
In addition, there were customers with whom we reached solutions, under what we call the positive equity sustainable solution and the low fixed-rate solution. There were approximately 1,500 or 1,600 customers. We had reached a solution with them-----
Robert Troy (Longford-Westmeath, Fianna Fail)
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There were 1,500 or 1,600 of those 1,900 customers.
Mr. Jim O'Keeffe:
Exactly. The rest of the customers had not reached an agreement with us, after that prolonged period. We put the solutions in place and agreed them with the customers. However, with the evolving nature of the definition of non-performing exposures, they were now classified as non-performing exposures and we sold them, in contract, with their new solution.
Robert Troy (Longford-Westmeath, Fianna Fail)
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The point I will make is that when one sells this on to a vulture fund, the fund does not always honour the contract and does not have the same range of options a conventional bank has. Most vulture funds will not offer the option to fix a rate. In the past number of months, European Central Bank, ECB, rate increases are putting people under considerable strain, because they do not have the opportunity to fix their rate. With their having negotiated with AIB, would it not have been more appropriate to keep those people on its books, work through the issue and help them achieve the solution, as agreed with AIB?
Mr. Jim O'Keeffe:
As the Deputy can see, the vast majority of customers that we sold through the loan sales had not agreed contracts or a restructure with us, after a prolonged period of trying. They are the vast majority. We reached a restructure with the 1,600, but because of definitions of non-performing exposures, the banks could not continue to carry those. When they were sold, they were sold in contract. The customers who were on the low fixed rate continued to have that fixed rate for the duration of the fixed rate, which was either a three- or six-year contract. That was honoured by the purchaser. The positive equity solution allows the customer, where he or she had positive equity, to continue either in interest-only or interest-only in part capital. We signed up to that as part of the solution. The purchaser will honour those, as well. In the vast majority of those cases, we were not being repaid and, therefore, the interest rate, as the Deputy describes it, was not an issue for the customer.
Robert Troy (Longford-Westmeath, Fianna Fail)
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I accept Mr. O'Keeffe is saying those customers were the vast majority, but I was focusing on the 1,600 people who negotiated, consulted and engaged with the bank. They were somewhat sold out. Having done the right thing with regard to organising a restructure they could adhere to, with the objective of keeping the roof over their heads, the mortgage book was sold on and those customers have been somewhat sold out.
Mr. Jim O'Keeffe:
There are many criteria and items around this, but I will refer to the two solutions. When the customers loans transferred to the purchaser, those contracts were honoured. The customer was on a low fixed rate for three or six years and it remained as the rate for the customer for that period of time. It was similar to the positive equity sustainable solution, where the customer may have been paying interest-only or interest-only in part capital. Those customers, because they engaged and we were able to put them into a new contract and restructure them, when they were sold to the new purchaser, they were protected by the very virtue of that.
Robert Troy (Longford-Westmeath, Fianna Fail)
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They are protected for the duration of the contract but, subsequent to that, they will revert to the variable interest rate which is much higher than it would have been at the time of the contract and they have no opportunity to fix the interest rate.
Robert Troy (Longford-Westmeath, Fianna Fail)
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Mr. O'Keeffe mentioned consistency and being very confident that a consistent approach has been adopted by all the banks in all write-downs that have been negotiated. I will share the experience of my constituent who was in a three-way partnership. A small building company bought some sites, developed them and sold them on and was doing quite well right through the 2000s, until the crash came. At the time of the crash, the company owed AIB €755,000. The developers engaged extensively. I may have made representations to Mr. O'Keeffe on their behalf at the time. I stand corrected on that, but I certainly made representations to whom it was subsequently sold on to.
At the time, the developers offered to pay €400,000, which was 52% of what was owed. That was rejected outright. Any suggestions or offers were rejected outright and the loan book was subsequently sold to a vulture fund that subsequently sold the properties for much less than was originally offered by the developers. They looked at the story over the past fortnight and wondered what they had done wrong, in that they were not able to achieve a similar arrangement. They questioned whether it was that they were simply a three-way partnership from rural Ireland that did not have a high profile. However, their offer to AIB was substantially greater than the write-down that was given in a well-documented case.
Robert Troy (Longford-Westmeath, Fianna Fail)
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To be clear, I did not send it to Mr. O'Keeffe. This is going back a long period. I am unsure whether I even made representations to AIB, though I certainly made them to the vulture fund. The developers themselves engaged extensively. They had an accountant working on their behalf on making proposals and trying to organise a debt settlement through negotiations. My point is AIB would have got 52% of what it was owed at that time. It sold the debt for less than that to a vulture fund and that fund subsequently sold on the property, even though that was something the developers had offered to do themselves. AIB would have been financially better off had it dealt with the three-way partnership from day 1 rather than selling the debt to a vulture fund.
Mr. Jim O'Keeffe:
It is not appropriate that we discuss the case, but I want to give some insight into this. I do not know the case in detail but the topic we are discussing is some of the challenge here. We will step away from these numbers altogether. A typical example is a situation where you are owed €1 million and somebody says they will pay you €500,000 and that you will not get better than that anywhere else. That is irrelevant to us, because we must work through the financial standing of the customer. Very often we do not get the right information shared with us, we do not get the sworn statements and we do not get the information to prove we are not leaving debt on the table, which is the purpose of this meeting. Sometimes people are absolutely frustrated, and as I now see, correctly frustrated, and say if only the bank had done a particular thing. However, there is often an issue because we could not get the full disclosure. I am not for a moment suggesting that occurred in this case; it is just my immediate reaction. If we are not getting the full disclosure we cannot take the risk of leaving money on the table and at a later date, in a forum such as this committee, being accused of not being consistent across the board. I am very happy to take it offline and have a look at this as a case study to give the Deputy reassurance. If there are learnings in it I will certainly take them away. For the customers involved, etc., it would be good to clear up that piece so it is not left there as an issue.
Robert Troy (Longford-Westmeath, Fianna Fail)
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I welcome that. I will not go into it any further out of respect for the identity of the customers. I can say there was no earning power there, going forward, and I am sure of that. The earning power or earning capacity of the story in the paper was far superior to that of the customers we have just discussed. I accept Mr. O'Keeffe's offer and I will make the case known to his office after the meeting. I thank him for engaging with us.
Mr. Jim O'Keeffe:
I thank the Deputy. I will comment on our arrival. We were asked to come in on 2 March. The Deputy said it was somewhat cynical at the beginning and that maybe we did it to suit the fact our results were out next week, but we were asked to come in on 2 March and we aligned with that. It was done genuinely.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I reassure Deputy Troy if the bank has to be invited in again then, as Mr. O'Keeffe knows, we will issue the invitation. There have been extensive questions asked and information requested during the course of this meeting and I am sure AIB will provide us with what we need as soon as possible.
Deputy Mairéad Farrell is waiting to come in, but I want to go back to something Mr. O'Keeffe said. He mentioned the bail-out money to support the customers of the banks. I cannot let him away with that, because the bail-out was caused by lots of things and the banks were central to it. Had the banks and their audit teams presented the figures in such a way as to indicate what was going on in the banks clearly and in a more upfront way, we might have been able to manage the crash better. It was funny, or maybe just a coincidence, that before the crash everything was perfect, the banks were solvent and so on, and then suddenly there were not. I find that very difficult to understand, but that is going back in history. The banking investigation was set up to deal with that but it was a whitewash and did not serve much purpose and we have been learning, or we should be, ever since.
Having said that, I advise customers who may still be in trouble and dealing with the bank that the correct thing to do is to come forward and discuss their case with the bank, put their cards on the table and give the truth of their circumstances. Such customers, of any bank, could perhaps use the organisations Mr. O'Keeffe mentioned in his opening statement, namely, the Irish Mortgages Holders Organisation, iCare, MABS and the Housing Agency to seek information and come to the bank to engage with it. Various members have said they have engaged with AIB and found it to be, as I think one member said, reasonable to deal with. I wanted to clear this up in case we get a rush of people coming to us saying they are reasonable and we should tell them what they can do. I have found every engagement with Mr. O'Keeffe's bank and every other to be robust, very challenging and without certainty of any outcome. That is the way it should be, because it challenges the bank's systems. It also challenges the customer who is in difficulty. If it was easier than we would really be asking questions. The real question therefore is whether the system is fair to everyone and whether the playing field is level for everyone. That is the reassurance we were seeking from Mr. O'Keeffe's bank today. While we can say the bank officials have given evidence to that effect, I would not like customers of any bank to think it is an easy process, because it is not. It can be quite harrowing for some people.
Mr. O'Keeffe mentioned the commentary in the media and said aspects of it "have been incomplete and have not presented the full picture". I can understand that and these committee meetings can be a two-way street, that is, witnesses may get their opportunity to clarify matters and be specific where they can be, and so on. Many questions have been asked about the breakdown of these figures. I am going to ask the bank officials present to reflect on the questions that have been asked and give as much of a breakdown as they can to the committee I do not want details on any individual case, but on the different groupings within the write-off figures they have given. This is so the public can get to understand what is happening in the banks in a much clearer fashion. In this way people will not be dealing with the broad technical terms and figures, but with easily understood descriptions of borrowers and the moneys that were written. A general commentary would allay the fears people have, and have expressed since reading what was in the media in the last number of months. That would be hugely important not just for AIB and the other banks, but for soothing the public disquiet out there. There is disquiet among people who have perhaps settled with the banks or gone through processes. They are reflecting and saying if they had known a particular thing, they would have approached matters differently. The bank owes it to the customers it has settled with, as much as to those who are looking for debt resolution, to explain to them that these are the real figures. Paper never refuses ink and there are two sides to every story, but we cannot see the other side. Accordingly, we rely on the banks to give us as much of a picture of that other side as they can.
Maybe after the closed period, which is how the bank described it, it might give the information from the bank to flesh out those questions. We did send a questionnaire to the other banks to help members understand how they approached it. I think we would refresh that questionnaire bearing in mind the questions asked today and put those questions to the bank so that we can say we treated all banks the same and we are getting the same information from them.
I have a couple of general questions. When AIB is dealing with debt resolution, who decides the route to take? Whether it is bankruptcy or a write-off, who decides that? Is it a decision taken between the bank and the customer or is it a case that the bank decides the route?
Mr. Jim O'Keeffe:
Typically, when we start out the engagement with the borrower, our first step is not about deciding whether it is bankruptcy, personal insolvency or court. Our first attempt is to engage with the borrower and to reach a consensual restructure with the borrower. It is as part of that process, as we go through it. That is where the 150,000 solutions come from. As part of that, we agree a restructure. We have our consistent policies and rules set to ensure we apply that consistently, as we discussed earlier, and the customer is restructured and we move on. Obviously, if we do not get the engagement and there is a difficulty then there are various elements. Personal insolvency and bankruptcy is an option and then there is also the legal route to recover assets and dealing with residual debt. The borrower can obviously opt to go down that route of the personal insolvency or bankruptcy and it would be the bank that would decide if it is going to go the legal route. Does Ms Duffy think that fairly summarises it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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So where the customer ends up is a matter for the customer and the level of engagement will dictate. Okay.
On the residual debt, some is sold on and in some cases it is written off. What is the breakdown of that?
Mr. Jim O'Keeffe:
Very often, if we have disposed of assets or dealt with the wider debt, it could be through consensual or the legal process, then you look at the residual debt to see what is sustainable by the borrower. It is down to affordablity by the borrower. If it is deemed uncollectible, I think Deputy Durkan used a good word in relation to it, then there is no point in our pursuing it and we will write-off that element of debt. If we can see there is affordablity there, to be fair to everybody, we will seek that the borrower repays that debt in a structure or repays it as a lump sum.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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So that is also dependent on the standard financial statement and engagement and you arrive at a point where it is write-off or residual debt and repayment over a period.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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My next question relates to receivers. I am always intrigued by the appointment of receivers. Like Deputy Troy, I have experience of a case where receivers were appointed. From the description I received from customers, not only to do with AIB but also other banks and other properties, they tend to run roughshod over the rights of people. There might be a question over the collection of rent from the property or sweating the asset to get the best possible amount of money out of it while they are waiting for sale or for the legal conclusion to something. We have tried to get receivers in here. If anyone is listening to this from a receivers group and they want to come before us to explain their role when appointed by the banks and courts, they might come forward and give their side of the story. They are more than welcome to do so. With cases where they go to court and there are receivers involved and the customer still feels aggrieved by the way they have been treated, is there a section in the bank that will look at that above and beyond the normal? In other words, these are not normal cases; receivers are involved and obviously there has been a difficulty between the bank and the customer. Because a receiver has been appointed it has ended up in court and got very messy and maybe the easiest thing to do is to sell it on to a vulture fund. Would the debt resolution financial solutions group look at a case further, despite all the efforts that have been made? If there is an aggrieved family, individual or company and they cannot believe what is happening to them, they feel it is a terrible injustice and they want to have some form of independent hearing apart from going down a legal route, will the bank accommodate that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What does that mean, that the bank will look at it independently?
Mr. Jim O'Keeffe:
If somebody sends a complaint into the financial solutions group, into Ms Duffy's team, it will look at it and it will adjudicate on it without asking the person who is dealing with it directly to adjudicate on it. Someone else will be asked to look at it broadly. That is the way we would go at it.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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So it does not just end. From what Mr. O'Keeffe says here, there seems to be a significant range of offers to make to a customer in terms of the processes within the bank. Even at the end, there is still an opportunity to go back to Ms Duffy's section and have it reviewed again, in terms of fairness and so on.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Okay. My last question is on the loans that are sold on to a vulture fund. Would the bank consider that in future sales that whatever vulture fund might purchase the loans, that AIB would insist on it giving its contact details to the customer? It is impossible to get in touch with them. It is impossible to pick up the phone and ring on their behalf if you are a third party. It is very difficult to tease out with them the fears, concerns or the difficulties of the customer that has just been sold on to the vulture fund. That is just not acceptable. I am coming across an awful lot more of that particularly now that the interest rates are increasing and vulture funds are applying significant increases. People are getting deeply concerned about their position and are finding it difficult to get a response or the type of response one would get from a mainstream bank. I want to flag that for AIB as an issue. We dealt with it here yesterday with Mr. David Hall, Mr. Padraig Kissane and Mr. Brendan Burgess. They seemed to have the same view on this.
Finally, I remind our guests that the more information in easily readable format the bank can give us to answer the various questions that remain unanswered from today's hearing the better. They might make it available as soon as possible. Deputy Barry said there is a bias against ordinary people and in favour of the wealthy; that there is one rule for the wealthy and famous and another for the ordinary people. I want that question answered. I think that goes to the nub of the problem in society. People need to know there is a fairness and a level playing field and that everyone is being treated the same.
Deputy Mairéad Farrell had a question.
Mr. Jim O'Keeffe:
We will pick up the contact details with our private equity partners to whom we have sold off. We will act straightaway in this regard. Regarding the response on the information side, as always, we will take this away with us and respond later to the committee. Notwithstanding the commentary in a wider context, the assurance we are giving the committee today is that we have the policies and procedures in place to ensure we are very fair right across the board. This will be seen as we break out the solutions we have given customers, etc. I think the data will bear out this, but this is over to us now to do.
Mairead Farrell (Galway West, Sinn Fein)
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The issue with coming in last is that usually many of the questions I was going to ask have been already asked. I will, therefore, start with a different kind of angle. Regarding sponsorship deals and sports sponsorship deals, how many of these is AIB involved in and how much are they worth?
Mairead Farrell (Galway West, Sinn Fein)
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I was referring more to a national level.
Mairead Farrell (Galway West, Sinn Fein)
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How much is that worth?
Mairead Farrell (Galway West, Sinn Fein)
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Okay. That is fair enough. I would not want AIB to jeopardise anything like that. My own local GAA club would not be too happy with me. The question then is how these sponsorship deals work. Do these also result in engagements by sports stars? Would they have to engage in particular speaking events or things like this? Does this kind of activity come into the sponsorship deals usually?
Mairead Farrell (Galway West, Sinn Fein)
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Okay. I thank Mr. Kinsella. I asked that question because I am aware that with some organisations this is a thing. I thank Mr. Kinsella for that information. Turning to the write-downs the witnesses are in front of this committee to discuss, and I am not asking them to name any names or anything like that, do they know the breakdown in terms of people who might be connected to those organisations with whom the bank has sponsorship deals? I refer to how many of them might be involved in these write-downs?
Mr. Jim O'Keeffe:
First of all, this is clearly information we could not share with the committee. Regarding this aspect, the set-up we have is to ensure the processes we have for debt write-down, or indeed to deal with customers in difficulty in general and in putting in place solutions, contain no biases. We discussed earlier the robust process we have around the customer-facing colleagues who work hard with the customers and our credit colleagues who challenge that position very strongly. I refer to how we remove conflict or any consideration of conflict as we go through the process, how it is reviewed then on a reporting basis and the external reviews that take place to give us all assurance there is no bias being manifest in this regard.
Mairead Farrell (Galway West, Sinn Fein)
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I thank Mr. O'Keeffe. It is fair enough if he cannot give the information, but I imagine he will understand it is a fair enough question for people to ask. Regarding someone who received a write-down, what information must the bank pass on to the central credit register, CCR?
Mairead Farrell (Galway West, Sinn Fein)
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Okay. Where a home is repossessed or offered up, or whatever the correct term might be for this process, would it be AIB's policy that the residual debt would be written off?
Mairead Farrell (Galway West, Sinn Fein)
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Okay. In the case where someone takes out multiple loans for multiple properties, does the family home come into question in terms of personal guarantees?
Mairead Farrell (Galway West, Sinn Fein)
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I would like if the witnesses could give me a general background. It can be as broad as they want it to be. To be fair, we do not deal with many of these things daily. In that context, it would be useful to have as much information as the witnesses would like to give. Much of the time, people come before our committee and then say they did not get the opportunity to say everything they wanted to say.
Mairead Farrell (Galway West, Sinn Fein)
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Okay. To be honest, my main line of questioning would have been to get this further detail concerning this context. I fully understand the witnesses are coming before this committee and saying clearly that there are no biases and that the bank has the requisite structures and policies in place in this regard. It is not that I am suggesting, in any way, shape or form, that this is not exactly what the situation is, but of course it is of interest to us as a committee, in the context of representatives of AIB being before us, to hear this analysis in terms of the breakdown concerning the number of people who are involved to a significant extent in organisations that might be sponsored by the bank. I refer to the impact in this regard and having this information broken down in respect of the number of people who get these write-downs. Am I right in saying there is no way the witnesses can give me that information? Is there any kind of breakdown in this regard we could be given, even at a later date, if it is not available now?
Mr. Jim O'Keeffe:
Regarding a wider breakdown of some of the numbers we have described in terms of the solutions, the breakdown of solutions and how they work across the various elements involved, we will take this question away. As the Cathaoirleach summarised the conversation here today, as we aim to present these data back to help the committee, through those data, to validate the position the members have heard about in respect of our consistency in this context. We will come back to the committee with this information. On the ask around the sponsorship element, etc., while we will always take a request for information away to examine, I do not see this as being realistic, to be absolutely honest with the Deputy. Mr. Kinsella has described very clearly that there is no reach out into that wider population. I must be careful now as well because we are coming very close to public commentary as a result. I can assure the Deputy-----
Mairead Farrell (Galway West, Sinn Fein)
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No, that is okay. I take Mr. O'Keeffe's point
Mr. Jim O'Keeffe:
When we respond to the committee with the data, I think we will be able to assist in making sure that our position regarding there being no bias or special deals or such practices, and there being consistency in this regard, comes through those data. This should eliminate any fears the committee may have that this might be connected to some other activity we are doing.
Mairead Farrell (Galway West, Sinn Fein)
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If it does not, I am sure the witnesses will be more than happy to come in front of the committee again, if needed.
Mairead Farrell (Galway West, Sinn Fein)
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Hopefully, that will not be the case. It will be understood, of course, that for us it is important all our constituents are treated equally, no matter what their backgrounds.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the Deputy. This brings us to the end of our meeting. Before he leaves, I remind Mr. O'Keeffe about the EBS and Belfry Funds and ask him again if he would be able to bring us up to date in this regard at another time. I encourage the reaching of resolutions and the taking out of roadblocks that appear to exist to this happening. I thank Mr. O'Keeffe and his colleagues before the committee, as well as his colleagues in the public gallery, for attending. I look forward to getting the requested information from AIB.