Irish Life says mortgage arrears up

Published 18th May 2011

Bancassurer Irish Life and Permanent said more customers were falling behind with mortgage repayments and surrendering life insurance policies early as a weak economy weighed on household incomes.

Irish Life, which plans to sell its life arm to help plug a 4 billion euro (3.5 billion pound) capital shortfall, said residential mortgage arrears were up 17 percent at the end of April, while customer lapses in its retail life business rose 10 percent in the first quarter when compared with a year earlier.

The group said it expected bad debt charges for the year to be broadly in line with the 420 million euros it reported in 2010.

Until this year, Irish Life and Permanent was the only Irish lender to avoid tapping the state for a bailout, but its acute funding position and exposure to Irish mortgages proved its undoing.

Stress tests in March showed Irish Life needed to raise 4 billion euros, and even with a successful disposal of the life division, the group's banking arm, Permanent TSB, looks set to follow rivals into effective nationalisation.

Under a plan agreed by the EU and the IMF in return for emergency loans, Ireland will radically shrink its banking sector, and Irish Life and Permanent has to dispose or run off some 15.7 billion euros in loans by the end of 2013 out of a total loan portfolio of 37 billion euros.

Source: ' Reuters '

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