AIB Live Thread: AIB Bank Before Oireachtas Finance Committee 26/09/2017

Pearse Doherty (PD)
Do you think that there is a risk of a property bubble in Ireland?

BB
I think what we clearly have is a significant shortage at this point in time. It occuring on the rental side and moving the prices higher. The level of debt to fund that is low. People are not getting into stretched positions. On the commercial side the level of equity involved is significant.
I wouldn't be somebody who would call it if it is or isn't. But terms of conditions at this point in time I would say there isn't.

PD
If people are taking out mortgages and relying on debt with your bank. If they're in a game where the prices have been artificially increased and the pin comes out and the bubble bursts and they will be in a bad position. From a customer point of view, the bank will be grand but the customer will be in a bad position.

BB
Supply is not normal at this point in time. There is scarcity value associated with the prices. There is a comfort point with the pricing that exists in the market.

*back and forth on each others opinions, BB says that the net position they have, his thoughts and the banks thoughts, that it's a balanced position*

Stress testing is discussed.
 
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PD
Asks for house price projections for 2018.

BB/RM
We rely on external data for that. We would see reported 6.5% is likely to continue. Inflation is likely to continue with that.

PD
Asks for cost of the properties built as part of the housing intiative in Ballymun that the bank funded.

BB
It was approximately €170,000 per property.

PD
Asks how this was achievable.

BB
Low or no site cost, low or no profit.

PD
Do you intend to go into this area in a larger scale.

BB
So long as the funding is supported from a banking point of view. Yes.
 
There's a discussion about debt writedowns in relation to buy-to-lets.
*had to take a call so have missed the detail*

Discussion around the number of houses they have on their books compared to the number of houses they are offering to the housing agency.

I think it's 280 houses being offered to the housing agency. Sorry they offered 603. They are ultimately taking 280.

AIB have posession of 519 houses in their possession at the moment and of those 280 are being offered to the housing agency.
 
PD
It's a great pity that you don't offer the Irish language on machines.
AIB
We don't have a huge demand for that. We don't offer that to our customers. We do offer Irish language staff in Gaeltacht areas and we don't see it as an ATM issue.

PD
If banks can provide this service in Strabane in other languages including Polish. It's the industry norm in mainland Europe.

PD
Was it wrong of AIB to not offer thousands of customers a tracker mortgage?

BB
Yes so this why we are putting them back on a tracker.

PD
How much money did AIB wrongly take from your customers?

BB
I don't know the amount because there is restitution involved and that's not the figure. I would say it's in the tens of millions.

PD
Who was responsible

BB
I did answer this question earlier.



Apologies everyone I've been nearly 2 hours at this and I have to wind it up shortly. Staying online to cover off the tracker discussion with Pearse Doherty.
 
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PD
All 9,000 employees made this mistake? Somebody had to make this mistake.

John McGuinness (Chair)
I don't think you're going to get an answer today.

BB
That all occurred in 2008. There is nobody left in the bank in this stage who were in a senior management position. None of the people survived restructuring.

There isn't a decision point where it was made. it was a reaction and response to the market as it was and it was a flawed market at the time.

PD
I accept that it was taken at a very senior level within the bank and I accept they are likely not there anymore but somebody took that decision. That didn't happen at branch. It happened at a senior level and it was wrong, it was theft, in terms of tens of millions, and it was wrong. Nobody is ever held accountable in the financial system. You are at the top of the bank and I belive it's your responsibility to carry out a full and thorough investigation *he's off on a rant but I have to say I agree with him, just can't type fast enough to keep up*

*right I'm done and off to dish up the dinner to my kids who have gone neglected for the past while! I hope it was of some help to AIB customers.*
 
Fair play to MMcG on the 3.67% question
and to Pearse Doherty for hitting him in relation to the skullduggery by senior management
John McGuinness tried his best to corner BB about the Central bank examples by using Example 2 from the central bank

Example 2 – Transparency Issue Resulting in Loss of Tracker Product
  • The customer drew down on a tracker interest rate;
  • Subsequently the customer then moved to a fixed interest rate for a specified
period, and on expiry rolled to a variable interest rate which was not a tracker
rate;
  • However, the documentation provided to the customer in advance of
switching to a fixed interest rate, including the information contained in the
forms signed by the customer at the time of switching, was not clear with
respect to the default interest rate to be applied to the customer’s mortgage
account at the end of the fixed interest rate period.
Click to expand...


Byrne wriggled out of it by saying
* he thinks AIB being fair to the customer
* AIB has responsibility to the taxpayer

But we customers know they are not being fair

The only recourse will be
* Central bank to adjudicate
* Failing that, customers can appeal to the financial ombudsman
* Failing that customers can take case to court... always difficult to do... surprising John McGuinness did not say this.
 
Thanks SS for the live commentary.

I hope the names of those who made these decisions are made public, even if it unlikely they will suffer any consequences.
 
Fair play SS. Great job!

Certainly looks like they're sticking to their guns on the "prevailing rate issue"!
 
Brendan Burgess said:
Yes, but they are not stopping you from moving "internally" to get a lower rate. They pay €2000 to switchers.

(Great summary Say Something. Saves me doing it.)

Michael McGrath is doing a great job.

Brendan
Click to expand...

By switching 'internally' from ESB to AIB, I presume this means the usual form filling, collecting bank statements, using solicitors, etc., does not apply? I also assume the €2,000 cashback does not apply because they won't regard you as a switcher?

I contacted my AIB branch today and they know nothing of any such planned 'process', so I don't expect it to happen any time soon.
 
SaySomething said:
BB
We can facilitate people to switch between the brands of EBS/AIB but we must reunderwrite any reissuing of credit. For a customer that has demonstrated the ability to pay. There is a process but we are willing to do this.
Click to expand...

If this was possible, EBS can do whatever they like with their rates, as the path of progression would be AIB for all those that have never missed a payment but will not be accepted by other banks (Neg Equ etc). I'll have a few calls to make tomorrow so . . .
 
After asking AIB to detail the 'process' involved in switching 'internally' from EBS, I have received a response which confirms that this was hot air.
The process is the same as those who are switching from any other lender.
Either I misunderstood the comments from the AIB CEO at this week's Committee, or he misled it.
 
lledlledlled said:
Either I misunderstood the comments from the AIB CEO at this week's Committee, or he misled it.
Click to expand...

I certainly understood him to say that he would treat applications from EBS customers the same as applicants from any other bank. He explained, IIRC, that they would have to go through the usual credit checks.

Brendan
 
My mistake. I assumed him saying they would 'facilitate' meant there would be a special arrangement for EBS customers.
Obviously there isn't and EBS aren't going to drop their rates so, in summary, everyone who can should leave EBS.
 
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