Ireland Financial News – Mortgages & Banking

STRUGGLING mortgage holders look set to be thrown a lifeline after a senior executive of state-owned AIB suggested a new “mortgage buyout” scheme for homeowners.

The scheme, proposed by AIB chairman David Hodgkinson, would see banks buying the homes of troubled borrowers and renting them back to the occupants.

Speaking at the MacGill Summer School in Glenties, Co Donegal, Mr Hodgkinson said the plan was one of a number of solutions presented to the Central Bank by AIB. Banks needed to find solutions for people who can’t pay — rather than those who won’t pay — their home loans, he said.

He also said that while candidates to become chief executive of the bank were aware of the €500,000 government cap on salaries, a long-term incentive plan over five years could help to secure the right person.

The AIB executive chairman warned that banks must charge more for credit if they were to achieve commercial viability .

It was “simply not possible” to build a sustainable future for any bank that was lending funds without getting a return.

And he asked the Government to consider the appointment of a ‘pay czar’ for banks in line with the US model “to avoid the pitfalls of the past”.

Mr Hodgkinson told the schools that AIB was training staff on how to deal with business.

“Our aim is to demonstrate we want to lend and to re-establish our role as trusted advisers to our customers,” he said.

On the issue of personal loan arrears, staff were being trained with the focus on keeping families in their homes through a variety of restructuring options.

He claimed that the relationship between government and banks had “become more distant” than was good for society and he called for an open and trust-based relationship “with no surprises on either side”.

“The distrust of bankers, however merited, will not ultimately resolve the problem of limited lending which needs us all to work together for its revitalisation.

“We in the banks must constantly challenge our tendency to believe ‘we know best’ when it comes to how to run our business,” he told the school.

The bank chief also warned that talk of leaving the euro was “dangerously naive”.

- Anita Guidera and Luke Byrne

Irish Independent

NAMA’s expansion since the beginning of last year has been big – it started with seven staff, increased headcount to 104 by year-end and now has 140 employees. Despite this, it still plans on recruiting 60 more before the end of the third quarter of 2011.

The body has just released its first ever annual report, which lays bare just how much it has recruited this over the last 18 months and – as we’ve suggested previously – that it’s being relatively generouswith its salaries.

The table below outlines exactly how NAMA’s staff base should look at the end of September:

As you can see, the majority (85) will be working in portfolio management – or engaging with the debtors and managing their assets. NAMA is looking for a range of expertise for these roles, from property to finance and accounting.

Credit and risk is also another big area of employment, a job which involves giving the sign off on credit, asset and debt management proposals as well as looking after the risk profile of NAMA. Both of these types of roles pay, according to our sources, around €120k at manager level.

Despite not giving a detailed breakdown of salary bands, it’s possible to roughly ascertain the average pay at NAMA. It spent €10.6m throughout 2010 on ‘salary costs and expenses’, which (assuming a headcount of 104) works out as an average wage of around €102k.

However, figures from the National Treasury Management Agency (which oversees NAMA) suggest that many executives are earning in excess of €250k. There’s also the fact that €10.6m is the total spent in 2010 and, as new staff members have been brought in progressively throughout the year, the average is likely to be higher than the figure above suggests.

Employment related to the agency doesn’t end with those working in the institution itself. The banks participating in the scheme – AIB, Bank of Ireland, Anglo Irish Bank, EBS and Irish Nationwide Building Society – together employ 500 people in their NAMA teams to administer the loans transferred across.

NAMA picks up the wage bill – around €72m is paid to the banks to cover the cost of these employees, or an average salary of €144k.