This is HML's comprehensive roundup of what's been going on in the Irish financial services sector, including how banks plan to tackle mortgage arrears. You can find an overview of all the latest industry stats, as well as HML news.

1. APRIL 2014
Eurozone inflation has dropped to its lowest level in four years to
stand at 0.5%. Some within the industry suggest the ECB could move to
cut the base rate
HML has been shortlisted for a European Outsourcing Association award
for helping its Irish clients meet the Single Euro Payments Area regulation
Bank of Ireland has ambitious plans to expand within the UK

2. HML News
HML has been shortlisted
for a European Outsourcing
Association (EOA) award.
We have been shortlisted in the European IT
Outsourcing Project of the Year category for
our work in assisting our Irish lenders in being
ready for the Single Euro Payments Area
(SEPA) regulation.
The SEPA Regulation was adopted in 2012
and had an initial deadline of February 1st
2014 when European banks had to ensure
direct debits and credit transfers adhered to
SEPA. As a European Union member, using
the euro, any Republic of Ireland direct debit
transactions must comply with SEPA
regulation as defined by the European
Payments Council and the Irish Payment
Services Organisation. However, due to
delays in some member states of
implementing the new system, the deadline
was pushed back until August 1st 2014.
• HML exceeded the original SEPA deadline
by three months and has met the new
deadline eight months early
• 2,209 transactions were carried out under
the new system in February 2014 alone.
This totals €1,590,101.90 across all of
HML’s Irish clients and 37% of all cash
collected on HML’s Irish portfolio
• Meeting client SLAs means no unnecessary
cost was incurred either by HML or its
clients, and it also prevented customer
distress from occurring by being asked to
make their mortgage or arrears payments
by another means
Padraig Collery, Projects Manager at
Start Mortgages, said: “HML worked
extremely hard on this project and delivered a
very high performance, not only in ensuring
that Start was ready well ahead of the SEPA
deadline, but also in the partnership approach
they took. They kept us involved and updated
on progress at all times and the project
relationship management I experienced
means I’d have no hesitation with working with
the HML project team on future business
critical projects.
“The project was launched almost a year ago
and was one of the most critical and
challenging projects undertaken between
Start, HML and our third-party direct debit
collections service provider. We had an issue
at the final test which was resolved from an
exchange of explanations and agreement on a
plan to resolve the issue. I very much
appreciate the openness in which HML
managed the project. The project manager
never hesitated in letting me know if there was
a problem. This approach was central to the
confidence we had in each other during the
project and reflected best practice towards
open and honest communications and
relationship management.”
Padraig Collery, Start Mortgages

3. Industry Statistics
Date reflects what the statistic was during that period, rather than when the statistic was published
Consumer Price Index (Central
Statistics Office)
MARCH ’14
0.2%
FEB ’14
-0.1%
JAN ’14
0.2%
European Central Bank (ECB)
Base Rate
APRIL ‘14
0.25%
MAR ‘14
0.25%
FEB ‘14
0.25%
Unemployment Rate (Central
Statistics Office)
MARCH ’14
11.8%
FEB ’14
11.9%
JAN ’14
12%
Average National House Prices
(MyHome.ie)
Q1 ’14
Down 0.7% from Q4
€187,736
Q4 ’13
Down 0.9% from Q3
€189,086
Q3 ’13
Down 1.4% from Q2
€190,790
Arrears
(Central Bank of Ireland - CBI)
PDH – total
PDH – 90 days+
BTL – total
BTL – 90 days+
Q4 ’13
136,564
96,474
39,250
30,706
Q3 ’13
141,520
99,189
40,426
31,227
Q2 ’13
142,892
97,874
39,948
30,326
Home Repossessions (CBI)
PDH
BTL
Q4 ‘13
1,014
503
Q3 ‘13
1,050
516
Q2 ‘13
1,001
502

4. Industry Statistics
Consumer Price Index
The CPI in March was 0.2% higher than the
same month in 2013. It has also increased by
0.2% from February, with the most notable
upward pressures coming from Clothing and
Footwear (3%), Miscellaneous Goods and
Services (2.3%) and Transport (1.2%).
This was partially offset by lower prices in the
Food and Non-Alcoholic Beverages and
Communications categories.
ECB Interest Rate
The ECB base rate remains at 0.25%,
although with eurozone inflation falling to
0.5%, some in the market are suggesting that
the rate could soon be further reduced.
Inflation is well below the ECB’s 2% target and
is at its lowest level for more than four years.
Unemployment Rate
The unemployment rate declined by 0.1% from
February to March to 11.8%, representing
396,900 individuals out of work. In the same
month in 2013, the unemployment rate stood
at 13.7%.
House Prices
The national average house price in Ireland
stood at €187,736 in Q1 2014, a 0.7% decline
on the previous quarter, but the slowest rate in
value decline for six years, according to
MyHome. However, it still represents an
almost 5% decline on an annual basis.
Commenting, Angela Keegan,
managing director of MyHome, said:
“The volatility in asking prices in Q1 reflects a
property market in transition, although a study
of transaction data does show the markets
have bottomed out both nationally and in
Dublin.”
In comparison, the average price of a residential
property in Dublin rose over the quarter by 1.3%
to reach €244,480.
This represents the largest quarterly increase in
asking prices since the property market
bottomed out 12 months ago, with asking price
growth climbing by 3.7% on an annual basis.
Arrears
Principal Dwelling Houses (PDH)
The number of PDH mortgage accounts in
arrears declined by 3.3% between Q3 and Q4
2013. Almost 18% of accounts were in arrears
by the end of Q4 2013, representing a total of
136,564.
There was a 2.3% fall in the number of
accounts in arrears of more than 90 days, the
Central Bank of Ireland revealed.
However, accounts in arrears of more than 720
days increased to 33,589, representing almost
63% of outstanding arrears on PDHs and
balances of €6.9 billion.
Buy-to-let (BTL)
The number of BTL mortgage accounts in
arrears decline during Q4 2013 to 39,250,
representing 27% of accounts. However, there
was also an increase in the number of those in
arrears of more than 720 days, representing
8.4% of accounts with balances of €3.9 billion.
Home Repossessions
At the end of Q4 2013, there were 1,014 PDHs
and 503 BTLs in lenders’ possession. Of the
PDHs, 168 were taken into possession during
the quarter, 63 of which were the result of a
court order, while 105 were abandoned or
voluntarily surrendered.

5. Top News Stories
Bank of Ireland (BOI) has
ambitious plans to expand
within the UK.
In an interview with The Sunday Telegraph,
BOI UK chief executive Des Crowley said it
plans to become a “leading challenger” to
Barclays and Lloyds Banking Group by
increasing services through its Post Office
network.
“We want to be their leading challenger,
providing simple, transparent, accessible
products to consumers right across Great
Britain as an alternative to the high street
banks. Twenty million potential customers
walk through the doors of the Post Office every
week,” Mr Crowley told the
newspaper.
The BOI and Post Office partnership, which
celebrates its 10th anniversary this year, has
been extended to 2023.
US funds Lone Star and
Oaktree Capital have
purchased more than half of
an IBRC mortgage portfolio.
Of the €1.8 billion Project Sand portfolio, 64%
has been sold to the two US funds. In addition,
85% of the €9.3 billion Project Stone portfolio
has been sold to Goldman Sachs, CarVal
Investors, Lone Star and Deutsche Bank.
In a statement, KPMG said: “The sales
process for the IBRC loans, including their
segmentation to meet demand from
international buyers, has delivered a very
positive result with over 90% of IBRC’s loan
assets now sold within 14 months of the
bank’s liquidation. The response of markets to
the liquidation and sales process has
exceeded our expectations.”
The National Asset
Management Agency
(NAMA) has sold its Northern
Ireland loan portfolio.
Cerberus Capital Management purchased the
portfolio - which contains assets to the Republic
of Ireland, Northern Ireland, Britain and other
parts of Europe and was initially valued at €5.4
billion.
NAMA chief executive Brendan McDonagh and
chairman Frank Daly said: "This transaction
represents a significant achievement for NAMA.
It is NAMA’s biggest single transaction to date
and we are satisfied that the sales process will
deliver the best possible result for the Irish
taxpayer.”
AIB’s David Duffy has
stressed the need for
customer-bank engagement
in order to resolve the issue
of mortgage arrears.
In his opening speech at the Oireachtas
Committee, Mr Duffy said “engagement is
the key that unlocks the conundrum for most
distressed borrowers. Having established
positive engagement, we can then proceed to
agree an outcome that provides certainty to all
parties and allows both customer and bank to
move onto a sustainable financial arrangement”.
He added that involving consumer advocacy
groups had led to a number of breakthroughs in
several arrears cases and was one of many
“new avenues” that the bank had explored.

6. Top News Stories
BOI’s chief executive Richie
Boucher has said the lender
will not write off debt for
those homeowners who
voluntarily give up their
properties.
He was speaking to the Oireachtas Committee
when he made the comments, adding that it
was the bank’s “policy and practice” not to
clear mortgage debt outside of legal processes
such as bankruptcy.
Mr Boucher told independent TD
Richard Boyd Barrett:“We have to take
into consideration the responsibility that we
have to our stakeholders to maximise the
recovery of the loan,” the Irish Times reported.
David Hall, the founder of
the Irish Mortgage Holders’
Association, is to run as an
independent candidate in
the Dublin West by-election.
Mr Hall is set to contest the seat previously
held by former independent TD Patrick Nulty.
He has said he will campaign about debt
management, an improved healthcare service
and jobs,
The contest is scheduled for May 23rd, the
same day as the local and European elections.
The Code of Conduct on
Mortgage Arrears (CCMA)
does not automatically apply
to BTL properties.
This is according to Cliodhna Walsh, solicitor at
Beauchamps Solicitors. In a blog for HML, she
explained that the CCMA doesn’t automatically
apply to BTL properties that have been
periodically occupied as primary residences.
Ms Walsh said: “Borrowers may now be
encouraged to move into investment properties
and notify the lender of their actions. A lender
will have to make its objection to this intention
known to the borrower in a clear and timely
fashion. Furthermore, lenders should be aware
that an objection such as this may not eliminate
the requirement to apply the CCMA, as it will
always be open to the court to assess the exact
circumstance of the borrower in question and
decide that on the facts, the Code should be
applied.”
The restructuring market has
become a mainstream
operation in Ireland.
Luke Charleton, restructuring partner at Ernst &
Young, said in a guest blog for HML that this is
in contrast to the height of the Celtic Tiger,
when there were few very experienced
insolvency restructuring practitioners.
He noted that the introduction of diplomas is a
“welcome development which can only help the
insolvency profession maintain the standards
expected of it by the courts, secured lenders,
borrowers and the general populace”.