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Now we get hit with a €67m bill in Anglo fiasco

THE full cost to taxpayers of repaying overcharged Anglo Irish Bank customers may come to €67m, the Herald can reveal.

The nationalised bank -- now called Irish Bank Resolution Corporation (IBRC) -- has set aside the massive sum to cover its potential liability.

IBRC has conducted an internal review of historical interest rate settings which is now almost fully concluded.

The aim of the process is to examine the rates applied to certain customer loan accounts for the period prior to January 2005.

The probe focused on whether the rates were consistent with the terms of the associated customer loan documentation.

In other words, customers were told they would be charged a particular amount for a loan but a higher sum was in fact levied.

Fianna Fail finance spokesman Michael McGrath described it as "deeply disturbing" that Anglo was in some cases charging the wrong interest rate on customer loan accounts and that this could cost the bank -- and by extension the Irish taxpayer -- up to €67m.

"I would like a comprehensive statement by the bank on the issue and the Central Bank also needs to investigate and confirm if other banks have been affected by interest rate scandals," Mr McGrath told the Herald.

IBRC, as part of the review, has already written to affected customers and issued refunds where appropriate.

The bank disclosed details of the investigation in its interim report and accounts for the six months to June 30, 2010, and again in its 2011 interim report. A figure of €67m has been provided to cover the amount of any liability.

A Central Bank spokesman said they continue to monitor IBRC's interest rate review.

"We note that impacted customers are being compensated accordingly and that IBRC has made provision for potential liabilities with respect to this matter in its financial accounts," he said.

The controversy carries echoes of the scandal which has rocked Barclays Bank in the UK and led to the resignation of its chief executive, Bob Diamond.

There, Barclays was found to have rigged the London Interbank Offered Rate (Libor), which British institutions charge when they lend to each other. For years prior to 2005, Anglo misstated the equivalent rate in Dublin, the Dibor.

But IBRC does not view the controversies as connected and no finding of intentionally misstating the rate has been made in the Anglo case, it is understood.


In September 2010, IBRC chief executive Mike Aynsley revealed in an interview that customers had been overcharged between 1999 and 2004. Asked if there was any evidence that it had been deliberate, he said: "We don't know yet.

"There is a statute of limitations and, theoretically, we're probably not compelled to go back beyond a six-year period, but because we believe there are important ethical issues around this for us and our customers, we're doing it and we will compensate people accordingly."