AIB will most likely take legal action for debt collection
The state-owned AIB was by far the most aggressive Irish bank in 2015 when it came to hounding customers over allegedly unpaid debts, according to a Irish times Analysis of court records.
Despite having a smaller loan book than Bank of Ireland, AIB issued over 50 per cent more summary judgments against borrowers in the High Court last year compared to its main competitor.
Summary judgments — where banks seek accelerated judgments without a trial or hearing a defense — are considered an aggressive debt recovery tactic. Banks have previously been criticized by High Court Master Edmund Honohan for the scale of such cases and their fairness to distressed borrowers.
AIB was responsible for more than a third of all such brief applications in the state last year.
However, the Bank of Ireland is far more likely than the AIB to go to court to collect debts owed by homeowners. More than half of all Bank of Ireland summary applications were made on behalf of its mortgage lender, compared with just over a quarter at AIB, which prefers to use this tactic against commercial borrowers.
AIB said: “In all cases, the bank strives for an out-of-court solution and implementation of an amicable debt restructuring with the borrowers”. It added it only resorts to the courts “when a borrower is not fully committed.”
The Bank of Ireland defended its heavy use of short-form applications, saying its home loan delinquency rate was below the industry average. It said it only uses the tactic against defaulting borrowers whom it determines can pay their loans but are not.
“Judicial action is only ever taken as a last resort, after all efforts to agree alternative repayment schedules with borrowers have been exhausted,” Bank of Ireland said.
After the two pillar banks, Danske, which is reducing its Irish loan book, is the second most aggressive in terms of bulk applications. The state-owned Permanent TSB only sought summary judgment against one borrower in 2015.
Buyers of bad Irish loans such as Stapleford Finance have also been prominent users of this tactic. Nama also followed about 15 borrowers in this way last year.
Among the borrowers facing summary judgment requests last year was independent TD Mick Wallace, who is being prosecuted by Cerberus for more than €2 million.
Analysis shows that the volume of debt-related summaries nationwide returned to pre-crisis levels in 2015. The approximately 2,300 applications in 2015 roughly corresponded to the number submitted in 2007. The number of applications rose sharply as the economy deteriorated during the crash, peaking at more than 6,100 in 2010.
Mr. Honohan, a brother of recently retired former central bank governor Patrick Honohan, wrote in 2014 that people should be concerned about the size of such requests.
He questioned whether summary judgments were fair to borrowers and suggested that the process was sometimes “favorable to the plaintiff.”
Solicitor Venetia Taylor recently represented a couple who overturned a summary judgment against them in favor of the Ulster Bank because they had been denied the right to a proper defence.