Belfast Telegraph

Bank probe told 100% mortgages were 'not a good move'

By Clodagh Sheehy

The introduction of 100% mortgages was "not a good move," a former finance director of Ulster Bank has told the Republic's banking inquiry.

However, Michael Torpey denied that his bank was responsible for bringing this product to the market and driving it.

He said it had been available in a number of institutions at the time "on a case by case basis" before it became publicly available.

Mr Torpey said the housing market at the time was "extremely competitive" and this was one of a range of products introduced to increase market share.

"With the benefit of hindsight it would have been better if it was not introduced," he told the Oireachtas inquiry in Dublin.

He told TD John Paul Phelan that 100% mortgages were just one element in a range of incentives "of one sort or another" to encourage people to buy houses.

Mortgages covering the entire value of a property were also a common feature on the housing market in Northern Ireland during the housing boom.

The product did contribute to the overheating of the market but was only one element, he said.

He added it "didn't move the dial in any dramatic fashion but it was not a good move to make with the benefit of hindsight".

Neither Mr Torpey nor Robert Gallagher, former executive at Ulster Bank, would be drawn on the bank's loan to property developer Sean Dunne for the Berkeley Court site in Dublin in 2005.

Mr Torpey said as financial director he had no part to play in these matters and would have no knowledge of individual customers, their loan applications or the credit decisions which would come before a credit committee.

Mr Gallagher said at the time of sale and purchase of that asset he was not with Ulster Bank and could not comment.

He described how after the night of the bank guarantee on September 29, 2008, the fact that it did not include Ulster Bank -which is part of the Royal Bank of Scotland group - had resulted in an outflow of deposits from the bank worth about €4bn (£3bn) in the month following.

He said Ulster Bank was not aware of the government decision until it was announced the following day and both the board of Ulster Bank and RBS sought to have Ulster Bank included but this had not happened.

Belfast Telegraph

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