BANK OF IRELAND BOSS SAYS BANK HAS MOVED TO STABILISATION STAGE - Bank of Ireland published its results and annual report this morning. It reported a total loss before tax for the group of €950m for 2010, compared to a loss of €2.2 billion in 2009. The bank lost more than expected - over €2.2 billion - on the sale of its property and land development loans to the National Asset Management Agency. It reported impairment on its remaining loans of €1.8 billion.
The bank said it is working actively with its advisors to meet the €4.2 billion equity capital requirement through a combination of capital management initiatives, other capital markets sources, and support from existing shareholders, to minimise any further investment from the Irish taxpayer. Its statement says the Minister for Finance has said the Group will be provided with time in order to raise the additional capital requirement from private sources. It expects to be in a position to make an announcement on its capital plans in the coming weeks. The bank is 36% owned by the State.
Bank of Ireland's chief executive Richie Boucher has said the bank would work with individual customers who were in mortgage arrears, but appeared to rule out any form of 'debt forgiveness', as mooted by AIB earlier in the week. He said the bank has a responsibility to all of its customers, including those who are repaying their loans in full. He said that 4% of its residential customers are in arrears, which means that 96% are making full repayments. The bank boss advised customers who are finding it difficult to repay their mortgage to contact the bank early and says a plan will be worked out on an individualised basis. He says that since 2009, 9,500 customers have gone through a 'modification' on their mortgages.
On the €2.2 billion loss on sales of its loans to NAMA, Mr Boucher said the figure was higher than expected but said the bank's other loan losses were in accordance with expectations. He said that NAMA has got a big job ahead of it, adding that the job is an important one for the country. He said the agency will make money out of the assets it sells and added that he wished it good luck.
He said the bank has made good progress on its costs over the last two years, with costs lowered by €360m last year. The bank is making money on the sale of some of its assets, including BIAM which sold earlier this year for €56m. He also said that the deficit in the bank's pension scheme is being dealt with. He said the bank has embedded new cost structures and continues to review all its future plans.
On the culture in the bank, Mr Boucher said that he wants Bank of Ireland staff to respect each other and their customers. He said he wants the bank staff to focus on their jobs to the best of their abilities and states that is what he is doing. He said the bank has moved from a survival mode to the stabilisation stage. He said the bank is now focused on its relationship with its customers.
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MORNING BRIEFS - Yesterday the third IMF published its third report of the week - the global financial stability report. This said that said unhealthy European banks are the biggest threat to global financial stability, and they need to find fresh capital. AIB said earlier in the week, and Bank of Ireland said today that Ireland's recovery needs the world's economy to improve.
