Allied Irish Banks has agreed a deal with Certus, the independent banking service firm, to help the State-controlled bank manage the growing number of customers who cannot repay mortgages. The deal, which has yet to be signed, will be the second between a bank and Certus, which manages the run-down of the €30 billion former Bank of Scotland (Ireland) loan book for British group, Lloyds.
The company, which is led by former Bank of Scotland (Ireland) management, will place about 50 staff with AIB to help the bank deal with the increasing number of mortgage customers in arrears.
Both AIB and Certus declined to comment on the arrangement.
Certus already manages about €8.5 billion of former Halifax mortgages sold by Bank of Scotland (Ireland) to 40,000 customers under a service contract with Lloyds subsidiary, Bank of Scotland plc. AIB, which is 99.8 per cent State owned, has an Irish mortgage book of €26 billion, while its recently acquired subsidiary, the former building society EBS, brings the banking group’s mortgages to €41 billion.
The Certus contractors will work with staff in AIB’s home mortgage business, which is run by executive Jim O’Keeffe.
AIB has been using contract and agency staff to help with distressed mortgage borrowers.
Certus has expanded since winning the contract to manage Lloyds’ Irish loans in 2010 after the partly nationalised bank said it was exiting Ireland and returning its Irish banking licence.
The company is focusing on a growing area of business by targeting contracts to service the management and wind-down of loans to secure higher returns.
It started with about 750 former Bank of Scotland (Ireland) employees and announced plans last year to hire a further 50 staff.
One in six residential mortgages are in arrears or have been restructured by Irish lenders to help customers meet repayments.
Just over 8% of mortgages were 90 days or more in arrears in September, the Central Bank said, while more recent figures from ratings agency Moody’s show that in October arrears rose above 10 per cent on about half the country’s mortgages, which support bonds sold by the banks.