EBS will next week begin proceedings to recover €12.5 million it provided in loans to Dublin solicitor Thomas Byrne, days after Irish Nationwide Building Society issued proceedings to recover €10.5 million it lent to him.
The development brings to eight so far the number of financial institutions owed money by Mr Byrne, whose whereabouts are unknown and who is being sued by IIB Bank and the Law Society in two separate actions.
Mr Byrne's liabilities are estimated to run to tens of millions of euro and are expected to exceed the money owed to institutions and property investors by solicitor Michael Lynn. Mr Byrne's apparent liabilities so far amount to at least €30 million but are expected to far exceed this figure.
EBS will make an application in the High Court on Tuesday in IIB's case against Mr Byrne over the €9 million provided in loans by IIB to the Walkinstown-based solicitor.
On Wednesday the court continued the freezing order over Mr Byrne's bank accounts and ordered National Irish Bank to provide details of accounts held by Mr Byrne.
The court heard that some properties provided by Mr Byrne as security for IIB's loan had already been mortgaged with four other lenders: Bank of Scotland (Ireland), which made representations to the court; ICS Building Society; Anglo Irish Bank; and Ulster Bank. National Irish Bank is also owed money by Mr Byrne, bringing to eight the number of institutions that have so far emerged as creditors of the solicitor.
It emerged yesterday that the Law Society's case against Mr Byrne, which was heard in private on Tuesday, will be heard again next Tuesday. The society has closed Mr Byrne's practice.
Meanwhile, following a High Court hearing in the Michael Lynn case yesterday, 10 institutions have agreed to exchange information to find out how much he owes them and on what properties they provided loans.
Mr Lynn's apparent liabilities currently stand at €40 million, but are expected to far exceed this figure. He owes money to IIB Homeloans, Bank of Scotland (Ireland), Ulster Bank, ACC Bank, AIB, Bank of Ireland, Irish Nationwide, NIB, Permanent TSB and First Active. EBS has no exposure to Mr Lynn. First Active and AIB will apply to the Commercial Court today to enter cases into the list against Mr Lynn.
The court heard yesterday that the institutions were facing "an information deficit". The President of the High Court, Mr Justice Richard Johnson, said he would describe it as "a lacuna".
The State's main financial institutions are reviewing their loan portfolios and lending practices following the revelations emerging from the Lynn and Byrne cases that the solicitors apparently took out multiple mortgages on the same properties and failed to register the banks' securities against the properties.
Banks are examining whether they have exposure on other borrowings given on solicitors' undertakings. Such mechanisms enable solicitors to close property deals without producing title records and to draw down loans without immediately registering the bank's security against the property.
