Danske Bank
Danske Bank is now the
most aggressive financial institution in the State when it comes to pursuing
its debtors through the courts for summary judgment, an analysis of official
court records has shown.
Danske is more than
seven times as likely as either of the pillar banks, AIB and Bank of Ireland,
to resort to court action against its customers, when the number of cases is
measured against the size of the banks’ loan books.
A total of 1,354 cases
for summary judgment – where the plaintiff applies for a fast-track ruling from
a judge without a trial or witnesses – were recorded on the High Court database
in 2014 to the end of last week. Danske, which is winding down its Irish loan
book, accounts for almost one in five such applications.
Banks criticised Edmund
Honohan, the Master of the High Court and a brother of Central Bank governor
Patrick Honohan, has repeatedly criticised banks for their increasing use of
summary judgment applications in debt cases.
Mr Honohan has
questioned whether the fast-track procedure gives bank borrowers a fair chance
to mount a defence.
Danske has issued
summary proceedings against 263 of its borrowers so far this year.
This compares to 237
for the AIB group, including its EBS subsidiary, and 245 for Bank of Ireland,
including a handful by its building society ICS.
However, Danske’s gross
loan book – which is in the region of €7 billion, including the €3.4 billion of
loans held in its “non-core” bad bank – is dwarfed by the gross loan books of
the two pillar banks.
Bank of Ireland’s gross
Irish loans are about €53 billion, while AIB’s domestic book is €48 billion.
Bank of Scotland, which
is also winding down its Irish operations, has filed 44 summary judgment cases
this year, which suggests it may be cutting deals with many of its indebted
borrowers instead of pursuing them through the courts.
Ulster Bank has filed
90 cases so far in 2014, while Rabobank-owned ACC has filed 44 summary judgment
proceedings against its borrowers.
The subprime lender
Start Mortgages, KBC bank, IBRC and Investec have all resorted to summary
judgment in fewer than 20 cases each. Permanent TSB has filed three such cases.
Of AIB group’s 237
applications, just 78 were made in the name of its mortgage bank, suggesting it
is primarily using the summary judgment tactic against other borrowers, such as
small business owners, and for individual unsecured loans.
About 94 of Bank of
Ireland’s 245 applications were from its mortgage bank, suggesting its approach
regarding when to seek a summary judgment is similar to AIB’s.
Human rights Writing in
The Irish Times earlier this year, Edmund Honohan suggested that the increased
use in recent years of summary applications is not “in the interests of
justice”, adding that their use had been rare when he practised as a barrister.
He has described
summary procedures as “plaintiff favoured” and perfunctory”, and suggested
earlier this month that some Irish summary judgments could run foul of European
human rights law.
“Not many [people] will
know that a High Court case will often consist only of the judge reading the
sworn written evidence of both sides and [summarily] judging the case on that
basis alone,” said Mr Honohan.
“The number of cases
being dealt with summarily is on the rise. Should we be concerned? . . I think
so.”
Danske said its
strategy was to work with distressed borrowers to “achieve the best outcome for
both” parties.
“Legal action is only
taken by the bank as a last resort in the case of a non-performing loan where
the customer is not co-operating with bank,” it said.
AIB and Bank of Ireland
were unavailable for comment.
