Bank of Ireland Posts €241M Loss After Loan Payment Breaks

By Lucia Osborne-Crowley
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Law360, London (May 11, 2020, 1:26 PM BST) -- The Bank of Ireland reported a first-quarter pretax loss of €241 million ($260 million) on Monday after making provisions to cover shortfalls opened by the COVID-19 pandemic, including loan-payment holidays for 86,000 customers.

The bank said the payment breaks — agreements that allow customers facing financial difficulty to pause loan repayments — have included mortgages, consumer loans and loans to small and midsized businesses. The bank put mortgage holidays in place in mid-March.

The lender said it is suffering because gross domestic product has fallen and from a slowdown in customer activity caused by the coronavirus pandemic, which has killed more than 280,000 people around the world.

The bank also said that the full economic impact of the outbreak remains uncertain. It has removed its earlier guidance for 2020 as a result.

Part of the €241 million net loss, for the three months of the year was an adjustment of €250 million to reflect the economic hit the bank is taking as a result of the public health crisis. Customer and business sentiment has "plummeted" amid the outbreak, it said.

The Bank of Ireland said it is working with the Financial Conduct Authority and the Prudential Regulation Authority, as well as trade groups such as U.K. Finance to come up with "fair, practical and sustainable" ways to help customers battling the fallout from COVID-19.

Around 10% of accounts in the U.K. and Ireland had requests for payment breaks associated with them. But the bank said the number of such requests have fallen sharply in recent weeks, with 90% of the 86,000 being requested before mid-April.

Irish banks, lenders and credit providers including the Bank of Ireland said in April that they have agreed to extend a three-month mortgage break to six months for borrowers facing financial hardship. The initial three-month payment holiday was agreed between Finance Minister Paschal Donohoe and major banks in March.

The Central Bank of Ireland gave the green light for the payment holidays in March. The state's five banks — AIB, Ulster Bank, Bank of Ireland, KBC Bank Ireland PLC and Permanent TSB PLC — had asked it to assure them that forbearance measures which they are prepared to offer households and businesses will not affect customers' credit ratings.

Financial institutions across the U.K. and Ireland have offered customers relief from the economic hit of the coronavirus outbreak in recent months, after pressure from regulators.

Britain's Financial Conduct Authority introduced rules in April to force banks and lenders to freeze payments and interest on high-cost credit products such as payday loans. The Central Bank of Ireland told insurers in March to put consumers first when assessing claims connected to the pandemic.

--Additional reporting by Joanne Faulkner and Najiyya Budaly. Editing by Ed Harris.

For a reprint of this article, please contact reprints@law360.com.

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