Sunday 4 December 2016

Ulster Bank sets aside €118m for trackers

Published 06/08/2016 | 02:30

Gerry Mallon: Ulster Bank CEO
Gerry Mallon: Ulster Bank CEO

Ulster Bank has become the third lender to put millions of euro aside to cover the cost of restoring customers to tracker mortgages and refunding them.

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The bank has made a provision of €118m to cover the cost of the redress scheme.

Ulster is being tight-lipped about the numbers involved but is estimated that some 1,500 customers are affected.

The Central Bank is taking enforcement action against the bank over the wrongful removal of the tracker rates.

So far, close to €450m has been set aside by just three banks to cover the cost of restoring the valuable tracker rates after the Central Bank ordered an industry-wide review.

AIB has set aside €190m, while Permanent TSB has provided €140m in its accounts to cover the cost of putting the customers back on trackers, refunding them overpaid interest and paying compensation.

Ulster Bank's chief executive Gerry Mallon said it was too early to say how many of the bank's customers had been impacted by the issue. He said it would be the end of the year before the probe was complete.

Some 150 people are working on the probe in the bank, with external consultants also involved, he said.

Mr Mallon claimed that he was unable to give more details on the probe because it was complex.

"Our focus is on putting things right for the affected customers."

He added: "I don't think any individual should expect any imminent contact from us."

The Ulster Bank boss would not be drawn on why the Central Bank had put it on notice in April that it will face sanctions for "suspected breaches" of the Consumer Protection Code in relation to its treatment of tracker customers.

Customers

Financial adviser Pádraic Kissane, who specialises in tracker-restoration cases, said there were at least 1,500 Ulster Bank customers affected by the tracker loss.

Many of these people had opted to fix rates when the European Central Bank rate started to rise, expecting to revert back to a tracker at the end of the fixed rate.

But they were denied this option.

Mr Kissane said there could be as many as 4,000 cases at AIB/EBS, not 3,000 as had previously been thought.

The State-owned banking group has had the credibility of its tracker probe queried after it emerged that some customers were being restored to trackers at an interest rate of 3.7pc - higher than AIB's variable rate.

Bank of Ireland is thought to have around 3,300 customers who are due to be restored to trackers, including 1,800 staff.

Most tracker rates are set at around 1pc over the European Central Bank rate - effectively 1pc, as the ECB rate is now 0pc.

This means that people on a tracker rate pay on average €6,000 less a year on a €200,000 mortgage than those on a variable rate with the same-sized mortgage.

Irish Independent

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