Business Irish

Friday 18 August 2017

Ulster Bank writing to SMEs due automatic fee refunds

Ulster Bank's CEO Gerry Mallon
Ulster Bank's CEO Gerry Mallon
Donal O'Donovan

Donal O'Donovan

Ulster Bank has begun contacting small business customers it thinks are due refunds of complex charges levied by its Global Restructuring Group, a unit within the bank that dealt with customers in financial distress between 2008 and 2013.

The GRG unit handled SME accounts in financial distress where debts were between €1m and €25m. The unit has been controversial, especially in the UK where Ulster Bank parent RBS has faced a storm of criticism over claims that fees and interests charged by the unit pushed some businesses into insolvency.

Ulster Bank said yesterday that it will start sending letters to Irish SME customers it believes are affected, and begun a process to start the automatic refund of fees. The Irish bank is drawing on a €470m fund set up by RBS in the UK to refund the fees. Around 100 Irish business that got into financial trouble during the crash are thought to be involved. The bank said it expects to have contacted them all by the end of March.

Yesterday Ulster Bank said profits in 2016 had plunged in large part because of the cost of cleaning up the tracker mortgage overcharging scandal.

Financial results for 2016 show operating profits in Ireland fell by €338m to €24m. The bank was forced to set aside €211m to provide for litigation and conduct costs, mainly linked to the work involved in identifying and remediating customers wrongly kept off low-cost tracker rates.

Despite the scale of the impact on customers, and on the bank's bottom line, Ulster Bank ceo Gerry Mallon said he did not believe the bank had deliberately set out to overcharge.

"We've got a pretty good sense of this now, I haven't seen any evidence that Ulster Bank at any stage wilfully mislead customers or denied customers rates that they were entitled to," he said. The issues came down to the scope for customer confusion, which was unacceptable, he said.

Even accounting for the tracker costs, 2016 was Ulster Bank's third consecutive year in profit.

Ulster Bank ceo Gerry Mallon said 2016 had been a year of solid progress for the bank,with an adjusted operating profit of€280m. Lending in the mortgage market was up almost 50pc in the period and commercial lending increased 20pc, he said

Irish Independent

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