AIB injects extra €40m into tracker redress fund
AIB has injected a further €40m into its tracker mortgage redress and compensation scheme, taking the State-backed bank's total provision on the issue to €230m.
The move was unveiled at the bank's annual results presentation yesterday - the first since it returned to normal trading on the London and Dublin stock exchanges last year, following the Government's €3.4bn sale of a 28.8pc stake.
AIB's decision to boost the amount of money set aside to deal with the overcharging crisis follows reassurances made last year by the bank's CEO Bernard Byrne, when he claimed that any change in the tracker provision would not result in a "material impact" to the balance sheet.
On a media conference call in Dublin yesterday, Mr Byrne stressed that the earlier provision of €190m had been made in 2015.
Since then, however, AIB has identified thousands more borrowers who have been impacted.
Mr Byrne said €30m of the additional cash was earmarked for redress and compensation, while the remaining €10m related to costs associated with the scheme.
In November, AIB became the fifth bank to face sanctions from the Central Bank for overcharging customers on tracker mortgages. Banks that are subject to enforcement actions face fines of up to €10m.
Owen Callan, an analyst with Investec, said AIB had fallen just shy of the "material impact" territory, which would require a figure of €50m or above.
But Mr Callan conceded that the increase was at the upper end of expectations, representing a near 25pc hike on the "existing provision".
The bank said 95pc of its "identified" customers would be compensated by the end of March, with the remainder of them dealt with by the end of June.