Ulster Bank losing out on millions due to IT system glitch
Ulster Bank is failing to charge corporate clients millions of euro because the bank's own computer systems aren't able to process charges it wants to apply.
AIB and Bank of Ireland now routinely charge interest on large corporate deposits, passing on the costs of keeping their money on deposit with the European Central Bank, thanks to its so-called negative interest rates.
The charges in effect are a bid to encourage companies to park funds elsewhere.
To date, all Irish banks have balked at the idea of charging ordinary savers for holding their deposits, but that is a financial strain.
While the other banks can at least charge big companies for minding their money, the 'Financial Times' reported last night that Ulster's computers say "no" when it tries to apply charges on some of its large deposits. A spokeswoman for the bank confirmed that some big customers are being charged, but not all.
"We already charge large corporates for certain deposits and are expanding this capability. We keep this pricing under constant review," the spokeswoman said.
Privately, sources at the bank admitted it should be charging for more of its corporate deposits but that its IT systems cannot process the work.
As a result Ulster Bank, owned by Royal Bank of Scotland, has to absorb the cost of negative interest rates itself. And that appears to have led some companies to move more money into the bank.
At the end of the first half of the year, Ulster Bank had customer deposits of €21.3bn, up €1.8bn or 9.2pc compared with the same time a year earlier. Bank of Ireland's deposits increased from €79bn to €80bn - but corporate savings were unchanged, and total customer deposits at AIB rose 3pc to €69.5bn.
The IT glitch is the latest in a series for Ulster Bank. One of the biggest fines ever imposed by Irish regulators was €3.5m Ulster Bank was ordered to pay after it left thousands of customers without banking services for a month back in 2012. The Central Bank slapped a fine of €3.5m on the bank after a system crash left 600,000 customers with no banking services for a 28-day period in 2012.