Irish Life sees mortgage arrears build

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 (£3.5bn) capital shortfall, said residential mortgage arrears were up 17 per cent at the end of April, while customer lapses in its retail life business rose 10 per cent in the first quarter when compared with a year earlier.

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

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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.