Bank 'Blames NAMA' For Huge Losses

A bank that trades across the whole of Ireland has revealed shocking losses.

Troubled AIB's Northern Ireland business, First Trust, lost £86m alone - compared to a £33m profit in 2008.

However, the bank's performance in the Irish Republic was disastrous with total losses there reaching 3.5bn euros.

In it's management report overview, the bank said €3.4bn of money related to loans that have been identified for potential transfer to the National Asset Management Agency (NAMA).

The overview said: "The outlook and environment remain extremely challenging.

"There are very significant matters and initiatives including NAMA, the European Union decision on restructuring and funding costs/market conditions, all of which could materially affect the Group's performance.

"In line with global trends for banks to hold more capital, AIB will be moving to increase its capital ratios. In 2010 AIB will prioritise restructuring and restoring its businesses to underpin viability, and renewing the Group's credibility amongst all its stakeholders."

However, AIB is now set to increase its mortgage interest rates in response to the data - its first-ever full-year loss.

In its preliminary results for 2009, the bank has reported pre-tax losses of €2.656bn for last year.

Describing the period as a "very challenging year", AIB said it was putting aside €5.35bn provision for bad loans. It said this equated to 4.05% of its average customer loans.

AIB Group Managing Director Colm Doherty said price rises across its financial products - including mortgages - were unavoidable.

He said the bank is paying more for the money it is borrowing than it is charging customers. He said this was unsustainable.

The Dáil Fine Gael Deputy Leader and Finance Spokesman Richard Bruton said AIB's worst ever results represented even more pain for consumers and borrowers, and should send a clear message to the Government that its banking policy is not working.

"The results paint a very worrying picture for taxpayers and for the economy. There is little comfort for borrowers, or for businesses, as the bank's commitment to restart lending is fragile at best.

"The open threat of rising costs for borrowers, including mortgage holders, also points to further trouble in store for the Irish economy," he commented.

(BMcC/GK)